Stock Market News Today, 5/26/23 – Stocks End Week with a Bang

Last updated: 4:00PM EST

As the trading day came to a close, stock market indices experienced a favorable outcome. The Nasdaq 100 (NDX), the S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) climbed by 2.58%, 1.31%, and 1%, respectively.

In the bond market, the U.S. 10-Year Treasury yield experienced a slight decline, dropping to 3.81%, a decrease of over one basis point. In contrast, the Two-Year Treasury yield showed an increase, hovering around 4.57%.

The Atlanta Federal Reserve released an update on its GDPNow reading, a real-time GDP growth estimator. Current estimates predict a 1.9% expansion in the economy for the second quarter. This estimation is a downward revision from the previous prediction of 2.9%, an adjustment influenced by recent data from the U.S. Census Bureau, the U.S. Bureau of Economic Analysis, and the National Association of Realtors.

However, it’s important to note that inflation continues to challenge global economies. It will be crucial to observe the actual GDP growth and how it may shift in response to rising interest rates’ influence on the economy.

Last updated: 12:50PM EST

Stock indices continue to surge higher in today’s trading session. As of 12:50 p.m. EST, the Nasdaq 100 (NDX), the S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are up by 2.5%, 1.3%, and 1%, respectively.

Negotiations to raise the debt limit ahead of next week’s deadline are moving closer to resolution. House Speaker Kevin McCarthy is hopeful for progress in the discussions focused on a two-year spending deal that extends the debt ceiling beyond the 2024 election. “This is about spending,” McCarthy emphasizes, aware of the potential ripple effect on Wall Street and the economy should an agreement not be reached.

Discussions have ventured into many areas, including federal spending caps, military and veteran funding, IRS expansion, and the effect of potential spending cuts. The ongoing negotiations reveal disagreements between both parties over details such as work requirements for government benefits. While some Republicans push for stronger conditions, Democrats resist the changes, arguing they hurt vulnerable populations.

Wall Street is preparing for all scenarios, planning to continue trading U.S. Treasuries even in case of a default. Far-right Republicans are urging McCarthy to insist on deep cuts while Democrats express concerns about being left out of the decision-making process. The final agreement, according to McCarthy, will reflect substantial reforms needed to justify a debt ceiling increase.

Last updated: 11:07AM EST

Stock indices are in the green so far in today’s trading session. As of 11:07 a.m. EST, the Nasdaq 100 (NDX), the S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are up by 1.87%, 1.1%, and 0.9%, respectively.

On Friday, the University of Michigan released its results on consumer inflation expectations over the next five years. Consumers now expect inflation to be 3.1%, which was lower than the expected 3.2% but increased compared to the previous month.

Taking a look at consumer sentiment, results came in at 59.2, which was higher than the expected 57.9. Still, this is a decrease compared to last month’s reading of 63.5. In addition, consumer expectations were also higher than expected. May saw a print of 55.4 versus the forecast of 53.4. This was also a decrease compared to last month’s result of 60.5.

Last updated: 9:30AM EST

Stocks opened higher on Friday amid optimism about a debt ceiling deal, even as inflation continued to be red hot in April.

The Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) were up by 0.4%, 0.3%, and 0.4%, respectively, at 9:30 a.m. EST, May 26.

Last updated: 8:30 AM EST

The Fed’s preferred inflation gauge, the personal consumption expenditure index was up by 0.4% in April meeting expectations and increased 4.7% year-over-year. The year-over-year rise was 0.1 percentage point higher than expected. Headline inflation was also up by 0.4% and rose 4.4% from a year ago, higher than the 4.2% rate in March.

As inflation refuses to cool down, investors expect that the Fed will continue to hike interest rates in the range of 5% to 5.25% in June. According to the CME FedWatch tool, the probability of a 25-basis-point rate hike rose to 62.0% from 51.7% on Thursday.

Meanwhile, orders for manufactured goods increased sharply by 1.1% in April versus forecasts of a 0.8% decline and as compared to a rise of 3.3% in March, indicating two consecutive months of growth. This increase was largely driven by the military but reassuringly, business investment also increased by 1.4% in April. Usually, companies invest more when they expect the economy to improve, but it remains to be seen whether this uptick is just a blip or the start of a new trend.

Core durable goods, excluding transportation, declined by 0.2% in April while economists were expecting it to remain flat and rise by 0.3% in the prior month.

The trade deficit in goods shot up by 17% in April to a six-month high of $96.8 billion. Imports rebounded while exports showed a broad decline.

Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) were up by 0.3%, 0.13%, and 0.10%, respectively, at 8:30 a.m. EST, May 26.

First published: 5:31AM EST

U.S. Futures remain volatile on Friday morning, as markets eagerly await progress on U.S. debt ceiling negotiations before the weekend. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are down by 0.12%, 0.18%, and 0.10%, respectively, at 4:00 a.m. EST, May 26.

Both the Dow and the S&P 500 indexes are on track to finish the week on a negative footing, while the Nasdaq 100 may close with a small gain. Reports state that the House and the Capitol are nearing a two-year deal to limit government spending, before the June 1 deadline. Additionally, the overhang of Fitch’s negative watch on the U.S. credit rating remains until the deal is finalized.   

Meanwhile, chipmaker Nvidia (NASDAQ:NVDA) continued to rally in yesterday’s trading session, hitting another all-time high and nearing a trillion-dollar capitalization. Nvidia’s rally pushed major semiconductor and AI stocks higher yesterday. Also, shares of retailers Gap (NYSE:GPS), Costco Wholesale (NASDAQ:COST), and Best Buy (NYSE:BBY) surged on solid quarterly results. Plus, semiconductor player Marvell Technology (NASDAQ:MRVL) jumped 17% in extended trading on a robust earnings beat and a solid AI-driven outlook.

On the economic front, the personal consumption expenditure (PCE) index, popularly considered an apt inflation gauge, is due for release today. Expectations are pegged at 4.6% year-over-year growth in April. Along with PCE, data on personal income, consumer spending and sentiment, and durable goods will be released today.

European indices are trading mixed today in anticipation of progress on the U.S. debt ceiling talks. The rally in chip stocks is also pushing up shares of Dutch chipmaker ASML Holdings (DE:ASME) today.

Asia-Pacific Markets End in the Green

Asia-Pacific indices ended the trading session in the red today, following the uncertainty of the U.S. debt limit negotiations. Hong Kong’s Hang Seng index remained closed for trading today.

Elsewhere, China’s Shanghai Composite and Shenzhen Component indices ended the trading session up by 0.37% and 0.12%, respectively.

At the same time, Japan’s Nikkei ended up 0.37% while the Topix index ended the trading day marginally down. Notably, Tokyo’s consumer price inflation (CPI) number grew by 3.2% in May, while the core-core inflation figure grew faster by 3.9%.

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