Last updated 4:05PM EST
Stock indices finished today’s trading session lower as traders await a House vote for the debt ceiling deal. Indeed, the Nasdaq 100 (NDX), the S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) fell 0.7%, 0.6%, and 0.4%, respectively.
In contrast to Loretta Mester, Philadelphia Fed President Patrick Harker recently suggested that the Federal Reserve might consider skipping the upcoming interest rate hike in June. According to him, with the monetary policy nearing a restrictive phase, it might be prudent to assess the real economic impact of the aggressive tightening cycle initiated in March 2022. The final decision, however, will be contingent on forthcoming labor market and inflation data.
Meanwhile, the Federal Reserve’s Beige Book report indicates that the economic activity in the U.S. saw negligible changes in April and early May. Consumer spending was steady or slightly elevated, and manufacturing activity varied across districts but remained mostly positive. Supply chain issues are seemingly improving, although some sectors like trucking witnessed a drop in demand, experiencing what some firms termed a “freight recession.”
The report further detailed that residential real estate saw some improvement across most districts despite scarce inventories. Commercial construction and real estate were on a downward trend, especially the office sector. Financial conditions remained stable in most areas, with consumer loan delinquencies inching toward pre-pandemic levels.
In terms of employment, most regions saw an increase, although at a slower pace than before. A cooling labor market was reported by employers in sectors like construction, transportation, and finance. While some businesses mentioned they had adequate staff, others mentioned pausing or reducing headcounts due to diminishing demand or economic uncertainty.
With prices continuing to rise at a moderate pace, business contacts across most districts anticipate similar inflation rates in the months ahead. These ongoing economic developments will likely influence the Federal Reserve’s decision on interest rates, seeking a balance between monetary tightening and supporting economic growth.
Last updated 2:10PM EST
Stocks remain under pressure so far in today’s trading. At the time of writing, the Nasdaq 100 (NDX), the S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are down 0.3%, 0.4%, and 0.4%, respectively.
Earlier today, Loretta Mester, President of the Cleveland Federal Reserve, expressed her opinion in an interview with the Financial Times that there is no compelling reason to halt the hiking of interest rates as efforts to control inflation continue. While some Fed officials have suggested a pause to get a clearer picture of the economy, Mester advocates for further rate increases before any pause.
The recent debt limit agreement has reduced some economic uncertainty, according to Mester, but she highlighted that the central bank will always operate with some level of uncertainty. She suggests considering a pause only when the risks of underdoing and overtightening are balanced.
As inflation remains high, with the April PCE price index showing a 4.7% year-over-year increase, Mester believes further action may be required.
Last updated 11:42AM EST
The latest round of economic data indicated a contraction in the U.S. economy as the Chicago Business Barometer, also known as the Chicago PMI, a regional manufacturing index, dropped 8.2 index points to 40.4 in the month of May while economists had forecast a reading of 47.3. This is the ninth straight reading of the index below 50 that indicates contraction territory.
Meanwhile, the labor market continued to remain strong in April as job openings rose to 10.1 million, more than the consensus forecast of 9.35 million versus 9.75 million in the prior month. The rate of job openings increased to 6.1% in April versus 5.8% in March.
The Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) continue to trade weak with a decline of 0.90%, 0.85%, and 0.74%, respectively, at 11:42 a.m., EST, May 31.
Last updated:9:30AM EST
Stocks fell at open on Wednesday as investors kept an eye on the progress of the debt ceiling deal. The Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are down 0.3%, 0.34%, and 0.3%, respectively, at 9:33 a.m., EST, May 31.
First published: 5:40AM EST
U.S. Futures are trending down this morning as traders await the vote on the Fiscal Responsibility Act by the full GOP House today evening, scheduled for 8:30 p.m., EST. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) are down 0.5%, 0.44%, and 0.25%, respectively, at 8:40 a.m., EST, May 31.
Yesterday, the compromise bill to increase the U.S. debt ceiling passed the initial test by garnering a majority vote from the 13-member House Rules Committee. This likely means that the bill could win a majority favor in today’s voting. After this, the bill will be presented to the Senate for a vote and needs to be passed by both before June 5, the earliest that the U.S. could default on its obligations.
As the markets open for trade on the last day of May, both the Nasdaq Composite and the S&P 500 are likely to finish the month in the green. However, the Dow is poised to end the month largely in negative territory.
Notably, chip maker Nvidia (NASDAQ:NVDA) reached the trillion-dollar market capitalization club yesterday and became the first company in the sector to reach the milestone. The company launched a supercomputer on May 29 that promised to turn even a common man into a programmer.
On the economic front, April’s JOLTS Job Openings data will be released today. The consumer confidence data released yesterday showed that consumer confidence in May fell to 102.3 from April’s reading of 103.7 and is declining steadily. This is a good sign as far as the interest rate scenario is concerned, as it means that the economy is slowing.
On the earnings front, cybersecurity firms Salesforce (NYSE:CRM), Crowdstrike (NASDAQ:CRWD), and Okta (NASDAQ:OKTA) will report today.
European indices are trading in the red today as markets worldwide await the result of the House vote on the Fiscal Responsibility Act this evening.
Asia-Pacific Markets End in the Red
Asia-Pacific indices ended the trading session in the red today, following uncertainty on the outcome of the U.S. debt ceiling vote. Also, China’s latest manufacturing purchasing managers index fell to 48.8 in May, marking a second consecutive slide. Further, property prices and transactions declined significantly, dragging down Chinese stocks.
Hong Kong’s Hang Seng index and China’s Shanghai Composite and Shenzhen Component indices ended the day down by 1.94%, 0.61%, and 0.70%, respectively.
At the same time, Japan’s Nikkei and Topix indices ended down by 1.41% and 1.32%, respectively.
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