The Week On Wall Street
Stocks rallied last week, propelled by growing optimism over reaching a deal on
raising the debt ceiling and avoiding a technical debt default by the U.S. The Dow
Jones Industrial Average edged 0.38% higher, while the Standard & Poor’s 500
gained 1.65%. The Nasdaq Composite index advanced 3.04% for the week. The
MSCI EAFE index, which tracks developed overseas stock markets, lost 0.47%.
Possible Debt Deal
After stumbling on weak April retail sales and a combination of disappointing earnings
and weak guidance from a major retailer, stocks moved higher mid-week as the news
on the debt negotiations turned more positive. The prospect of an agreement helped to
lift a cloud of uncertainty that had weighed on markets in recent weeks and sparked
sufficient optimism to shake off comments by the Dallas Fed President, who indicated
that economic data may not support a pause in rate hikes yet. Aiding the market’s
upbeat mood was a positive update on deposit growth at a troubled regional bank.
Stocks surrendered some of the week’s gains on Friday following reports of an impasse
on debt talks and comments by Fed Chair Powell.
Recent updates have suggested that the housing market may be staging a turnaround
after a long period of contraction. Last week’s data contained some fresh evidence of
revival and caution that any potential recovery may remain further out. The first positive
sign was an increase in home builder sentiment that put the National Association of
Home Builders Housing Market Index’s confidence level at the midpoint for the first time
since July 2022. An unexpected 2.2% rise in housing starts in April followed. These
encouraging reports, however, were followed by a disappointing 3.4% decline in April
existing home sales.
This Week: Key Economic Data
Tuesday: Purchasing Managers’ Index (PMI) Composite. New Home Sales.
Wednesday: FOMC Minutes.
Thursday: Gross Domestic Product (GDP). Jobless Claims.
Friday: Consumer Sentiment. Personal Income and Outlays. Durable Goods Orders.
This Week: Notable Companies Reporting Earnings
Monday: Zoom Video Communications, Inc. (ZM)
Tuesday: Lowe’s Companies, Inc. (LOW), Palo Alto Networks, Inc. (PANW), AutoZone,
Inc. (AZO), Intuit, Inc. (INTU)
Wednesday: Nvidia Corporation (NVDA), Analog Devices, Inc. (ADI), Snowflake, Inc. (SNOW)
Thursday: Costco Corporation (COST), Marvell Technology, Inc. (MRVL), Workday, Inc. (WDAY)
Not a lot to add to the above. Stocks are waiting on a debt deal. It's likely to happen, they just
have to create a little more anxiety and angst first. I decided to include some visual aid this week.
I often hear from people about how China owns the U.S. and so much of our debt. In reality, they
have just a small piece of the pie. Japan is the largest holder along with numerous other countries.
This doesn’t include the debt owned by U.S. entities and individuals.
So, as you can see, even hinting the U.S. would default is preposterous and irresponsible. The
tsunami it would set off would be unimaginable. This is political gamesmanship at its worst.
Still, the market is on hold until we see some kind of deal.