(Bloomberg) – The stock market has remained rangebound as investors waited for clarity on whether Washington lawmakers will be able to reach an agreement to avert a US default.
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Stocks posted modest gains ahead of a meeting between President Joe Biden and House Speaker Kevin McCarthy — with mixed signals from both sides. In late trade, a $382 billion exchange-traded fund that tracks the S&P 500 was little changed after Treasury Secretary Janet Yellen reiterated her department could run out of cash as early as June 1 if Congress passed the federal debt limit does not raise or drop.
Shares fell early Monday as data showed New York’s manufacturing sector fell the sharpest since April 2020. This week’s numbers are likely to underscore further economic weakness and encourage dovish voices from the Fed, even if inflation hasn’t been comforting, according to Bloomberg Economics’ Anna Wong. Two Federal Reserve officials said they favor suspending rate hikes.
Earnings from retailers like giant Walmart Inc. will also come under scrutiny over the next few days.
“Low Conviction”
“There is little conviction on either side as the market continues to digest earnings, a slew of economic data and blame-pointing in Washington over the debt ceiling discussions,” said Craig Johnson, chief markets engineer at Piper Sandler.
For Chris Larkin of Morgan Stanley’s E*Trade, it’s fair to question whether low stock volatility suggests the market is being too complacent — especially after the S&P 500 hit its narrowest non-holiday weekly range since August 2021.
“A debt default may not be the most likely scenario, but any prolonged debate or unexpected development can lead to higher volatility,” he noted.
The story goes on
JPMorgan Chase & Co.’s Marko Kolanovic joined a chorus of Wall Street strategists on Monday and warned that the impasse on the US debt ceiling is another headwind threatening the outlook for stock markets.
Morgan Stanley’s Mike Wilson issued a similar warning on the debt ceiling deadline, noting that the bank’s clients say the problem is unlikely to be resolved without short-term volatility. Meanwhile, BlackRock Investment Institute’s Jean Boivin and Wei Li said they expect a potential debt showdown to trigger renewed volatility.
Important events this week:
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China Retail Sales, Industrial Production, Tuesday
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Eurozone GDP, Tuesday
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US Retail Sales, Industrial Production, Corporate Inventories, Tuesday
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Fed speakers Tuesday include Cleveland’s Loretta Mester, New York’s John Williams, Atlanta’s Raphael Bostic and Chicago’s Austan Goolsbee
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Eurozone CPI, Wednesday
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BOE Gov. Andrew Bailey delivers a keynote address on Wednesday
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US housing construction begins on Wednesday
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US Initial Jobless Claims, Conference Board Benchmark Index, Existing Home Sales, Thursday
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Japanese CPI, Friday
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ECB President Christine Lagarde takes part in the panel discussion at the Brazilian Central Bank Conference on Friday
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New York Fed’s John Williams speaks at monetary policy research conference in Washington; Fed Chair Jerome Powell and former Chair Ben Bernanke will join the panel on Friday
Some of the key movements in the markets:
Shares
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The S&P 500 was up 0.3% as of 4 p.m. New York time
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The Nasdaq 100 rose 0.5%
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The Dow Jones Industrial Average rose 0.1%
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MSCI World Index up 0.4%
currencies
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The Bloomberg Dollar Spot Index fell 0.3%
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The euro rose 0.2% to $1.0875
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The British pound rose 0.6% to $1.2530
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The Japanese yen fell 0.3% to 136.06 per dollar
cryptocurrencies
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Bitcoin rose 1.7% to $27,413.57
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Ether was up 1.7% to $1,828.92
Bind
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The 10-year government bond yield rose three basis points to 3.49%
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The 10-year German government bond yield rose three basis points to 2.31%
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The 10-year UK government bond yield rose four basis points to 3.82%
raw materials
This story was created with the support of Bloomberg Automation.
– Featuring Isabelle Lee, Peyton Forte and Carly Wanna.
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