Get ahead of the game in the market with updates on currency rates, stock prices, crude oil, gold, and retail earnings reports. Keep an eye on the crucial factors that matter most: debt ceiling negotiations and the Federal Reserve’s inflation gauge. Stay informed to make the most of your investments.
Stock markets experienced a mix of gains and losses, with the Nasdaq 100 index leading the way with an impressive 3.5% surge.
The U.S. Congressional Budget Office issued a warning that the country could default on payments by June’s first two weeks if a debt ceiling increase is not implemented.
Meanwhile, Asia saw a decline in the Hang Seng index, but the Nikkei 225 soared by an impressive 5%. The German DAX 40 advanced by 2.3%, while the UK FTSE 100 remained flat.
Bloomberg Chart
Tech Stock Investors Seem Not Worried About Recession
Less S&P 500 companies worry about a recession than in the past, even amid economic fears, suggests research by FactSet.
Out of the 90%+ companies that announced earnings, only 107 referred to a “recession” in their calls. This is a significant drop from the 238 companies that expressed concern in Q2 2019.
Nvidia’s upcoming earnings announcement has investors on the edge of their seats this week amidst recent market developments.
As tech leaders like Nvidia, AMD, NOW, GOOGL, SNOW, and PLTR led the recent gains, the Nasdaq composite and S&P 500 hit impressive highs last week.
However, despite initial optimism about debt-ceiling negotiations, GOP negotiators suspended talks and bank stocks took a hit after Treasury Secretary Yellen suggested more mergers might be necessary.
Still, the market remains stable, with the Fed chief signaling a rate pause next month and some stocks offering careful opportunities for investment.
As Tesla makes strides against resistance, all eyes are on Nvidia as the next potential catalyst for change.
Earnings Reports Expected This Week
Earnings Reports are on the horizon in the retail sector! AutoZone,Lowe’s, Dick’s Sporting Goods, Urban Outfitters, BJ Wholesale Club, Costco, Best Buy, The Gap and Dollar Tree will all be reporting next week.
Nvidia,Analog Devices TD Bank and Zoom Video Communications, will also be making their reports. Companies like Intuit, as well as Urban Outfitters will be revealing their earnings on Tuesday, May 23rd.
Thursday, May 25th is packed with earnings reports from companies like ULTA, BBY, and GPS. And don’t miss PDD Holdings Inc. and Booz Allen Hamilton Corp.’s earnings reports on Friday
Analysis
The stock market is on the rise, but only a select few companies are leading the way while others are reaching their peak.
For those who acted on tech buy signals, profits have been significant, but it’s important to maintain a cautious approach and have a plan in place.
Fortunately, there are various sectors that could become profitable in the future, so keep an eye out and stay informed by reading The Big Picture daily.
Debt Ceiling Talks
Confidence in a deal to raise the US debt limit is persisting among investors, though doubts are starting to emerge.
President Biden held a productive phone call with Speaker McCarthy on Sunday, but no agreement was reached, and negotiators from the White House and House GOP met that day.
Biden also raised the possibility of invoking the 14th Amendment to declare the debt limits invalid, acknowledging the authority exists, but raised concerns about the potential challenges.
With the US likely to hit the debt ceiling in early June, pressure is mounting as the deadline approaches.
Personal Consumption Expenditures (PCE) Price Index
Get ready for the latest inflation data from the Bureau of Economic Analysis this Friday! The Personal Consumption Expenditures (PCE) Price Index, the Fed’s go-to indicator for inflation, is expected to show a 0.2% jump in prices last month – up from 0.1% in March.
On an annual basis, prices likely increased 4.1% – the slowest growth since May. And if you exclude food and energy costs, core prices are projected to have risen 0.3% in April and 4.6% compared to last year.
Released monthly the PCE index is closely watched by economists. And, with quarterly and annual data available in the GDP release, you can get a comprehensive overview of how prices are changing over time. Stay tuned for the full report!
Housing Report
Don’t miss out on updates about the housing market! Find out the latest on new and pending home sales for April.
While new home sales are expected to have decreased slightly from March, the National Association of Realtors’ Pending Home Sales Index paints a more worrisome picture as it dropped 5.2% in March and 23.2% year-over-year.
This suggests that the U.S. housing market is facing continued pressure, despite recent stabilisation in mortgage rates and a slight uptick in home prices as shown by the Case-Shiller Index.
Stay informed on the state of the housing market with these crucial updates
Keep an eye out for the Federal Reserve’s latest meeting minutes on Wednesday, highlighting their decision to raise interest rates by 25 basis points.
Plus, stay up-to-date on economic indicators like the Real Consumer Spending, Pending Home Sales, and Personal Income and Spending reports. Don’t miss out on this packed week of news and insights.
Get the edge you need by checking out TraderFactor’s Event Calendar.
Euro Resilient as USD Falls: US Data Key to Next Moves
As the US Dollar dips, the Euro bounces back up, with the latter closely watching US economic data. Meanwhile, the British Pound hinges on US debt talks and inflation reports from the US and UK.
The Japanese Yen experienced a decline against major counterparts this week, with a 2.3% weakening against the US Dollar in the past 2 weeks.
It’s been the worst period for the currency since February. JPY’s dip can be attributed to external factors, with the Bank of Japan remaining static, making the currency sensitive to its surroundings.
The rise of USD/JPY has also coincided with a recovery in Treasury yields, which is why the week ahead remains uncertain for the Japanese Yen. However, recent US inflation data has been consistent, with a strong labor market and upbeat retail sales.
The focus for markets shifts to US debt concerns while all eyes are on the Core PCE Deflator, the Fed’s preferred inflation gauge, in the days ahead.
Any indication of sticky price pressure could result in cooling rate cut bets and potentially extending USD/JPY’s winning streak.
Elsewhere, while the Australian Dollar is currently steady, the Japanese Yen is expected to fall further against its rivals, and gold prices may go bullish thanks to a flight to safety.
The US Dollar remains on an upward trend, with the Federal Reserve’s preferred inflation gauge expected to seal its fate.
Keep an eye on the PCE Core Deflator and Initial Jobless Claims data this week to gain insight into the fate of monetary policy and its impact on the US Dollar.
Interest Rates Outlook
The Federal Reserve may pause interest rate hikes at their June meeting, according to comments made by Fed Chair Powell. This follows more challenging credit conditions and could mean a hold or a pause in the tightening cycle.
Meanwhile, Chinese economic data has underperformed, but potential stimulus measures could offset some of the risks.
This week, US debt ceiling talks and continued Fed speak will be important, along with interest rate decisions in New Zealand and inflation data in the UK and Germany. Other key data releases include the FOMC minutes, US Q1 GDP, and UK and Australian retail sales.
Crude Oil Outlook
Crude oil prices saw a small drop on Friday but increased for the week, breaking a four-week downward trend. Uncertainties surrounding the demand outlook and talk of a recession on Wall Street are contributing factors.
Although the U.S. economy has so far avoided a recession, indicators such as the inversion of the yield curve suggest a downturn is on the horizon, and recent turmoil in the banking sector is only complicating the situation.
The U.S. is the biggest contributor to global GDP, so a potential contraction could lead to a decrease in fossil fuel demand and cause a significant dip in crude prices.
The current impasse over the U.S. debt ceiling only worsens energy market challenges, and a default could have catastrophic consequences for the financial system.
While it’s likely Democrats and Republicans will reach a deal, it may come too late to prevent significant market turbulence.
In the current uncertain climate, investors should stay alert and keep an eye on the debt ceiling saga.
Disclaimer:
All information has been prepared by TraderFactor or partners. The information does not contain a record of TraderFactor or partner’s prices or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information. Any material provided does not have regard to the specific investment objective and financial situation of any person who may read it. Past performance is not a reliable indicator of future performance.
