Stock indices finished today’s trading session in the red, as the S&P 500 (SPX), the Nasdaq 100 (NDX), and the Dow Jones Industrial Average (DJIA) fell 0.16%, 0.37%, and 0.03%, respectively.
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The Congressional Budget Office (CBO) recently projected that the federal budget deficit will spike to $1.54 trillion this year, a significant increase from the $1.41 trillion estimate made in February. Alarmingly, the CBO also noted a high risk of the Treasury Department running out of funds by early June unless Congress agrees to increase the $31.4 trillion federal debt limit.
Treasury Secretary Janet Yellen has echoed these concerns, warning that if the debt ceiling isn’t raised, the U.S. would have to default on certain obligations, a move that would hurt the nation’s credit rating.
Yellen is adamant that the focus should be on Congress to act, as there’s no viable alternative to keep government payments flowing. She also mentioned that the Biden administration hasn’t discussed what steps they would take in the absence of the debt ceiling being raised.
This situation is compounded by the fact that House Republicans are insisting on new spending cuts agreements before agreeing to increase the debt limit. Talks between President Biden and congressional leaders on this issue have been postponed to next week.
The stakes are high, as failing to raise the debt limit could leave the Treasury out of cash by June 1, a situation that America hasn’t faced since 1789.
Last updated: 2:00PM EST
Stock losses accelerate as we enter the final couple of hours of today’s trading session. As of 2:00 p.m. EST, the S&P 500 (SPX), the Nasdaq 100 (NDX), and the Dow Jones Industrial Average (DJIA) were all down 0.7%, 0.9%, and 0.5%, respectively
Michelle Bowman, a Federal Reserve Governor, suggested in a speech earlier today that further interest rate hikes may be necessary. She believes that inflation and labor market data aren’t convincingly showing that inflation is on a decline.
If inflation continues to persist and the job market remains robust, she sees a need for more monetary policy tightening to achieve a suitably restrictive stance.
Bowman’s comments follow the Fed’s recent decision to raise its benchmark rate for the 10th consecutive time, hinting, however, that it might pause to assess the real economy’s reaction to these monetary tightening measures.
Ahead of the Fed’s June meeting, she plans to scrutinize incoming economic data for reliable indications of decreasing inflation before contemplating future rate hikes. Despite a slight decline, recent CPI data still surpass the Fed’s 2% target, and the U.S. job market is notably strong.
Last updated: 11:20AM EST
Stocks are in the red as consumers are becoming less optimistic. As of 11:20 a.m. EST, the S&P 500 (SPX), the Nasdaq 100 (NDX), and the Dow Jones Industrial Average (DJIA) were all down 0.3%, 0.4%, and 0.3%, respectively
On Friday, the University of Michigan released its preliminary results on consumer inflation expectations over the next five years. Consumers now expect inflation to be 3.2%, which was higher than the expected 2.9% and an increase compared to the previous month.
Taking a look at consumer sentiment, results came in at 57.7, which was lower than the expected 63. This is a decrease compared to last month’s reading of 63.5. In addition, consumer expectations were also lower than expected. May saw a print of 53.4 versus the forecast of 59.8. This was also a decrease compared to last month’s result of 60.5.
Last updated: 9:36AM EST
Stocks opened higher on Friday morning as investors looked at ending a volatile trading week on a high. The Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) were all up 0.23%, 0.26%, and 0.2%, respectively, at 9:36 a.m. EST, May 12.
First published: 5:36AM
U.S. futures are trending higher this morning on signs of easing inflation. Futures on the Nasdaq 100 (NDX), S&P 500 (SPX), and the Dow Jones Industrial Average (DJIA) were up 0.31%, 0.43%, and 0.41%, respectively, at 5:36 a.m. EST, May 12.
Markets closed mixed on Thursday as troubles around regional bank PacWest (NASDAQ:PACW) overshadowed favorable Producer Price Index inflation reading for April. The Dow Jones fell more than 200 points and the S&P 500 declined 0.17% on Thursday, while the Nasdaq 100 bucked the trend, rising 0.31%.
Following key economic releases on the Consumer Price Index and Producer Price Index this week, traders will look at the preliminary consumer sentiment data to be released today. The May estimate stands at 63.0, lower than April’s 63.5.
Meanwhile, markets could also be influenced by the concerns around the debt ceiling, with a meeting between President Joe Biden and top congressional leaders slated for Friday postponed to next week. On Thursday, JPMorgan Chase (NYSE:JPM) CEO Jamie Dimon warned that the uncertainty over the debt ceiling could trigger “panic” in the markets. The U.S. could default on its debt on June 1, if political leaders fail to reach an agreement.
European indices moved higher, driven by upbeat earnings reports of many companies. In particular, shares of Swiss luxury group Richemont (CFRUY), which owns brands like the Cartier, touched an all-time high after surpassing analysts’ sales and earnings estimates.
Meanwhile, the U.K gross domestic product rose 0.1% in the first quarter, despite a 0.3% contraction in March output due to weakness in the service sector. Nonetheless, the U.K. finance minister Jeremy Hunt cautioned that the country’s inflation remains very high.
Asia-Pacific Markets End Mixed
Asia-Pacific indices ended the trading session mixed today. Investors seem worried about China’s post-pandemic recovery losing steam.
Hong Kong’s Hang Seng, China’s Shanghai Composite, and Shenzhen Component indices ended the trading session down by 0.59%, 1.12%, and 1.23%, respectively.
In contrast, Japan’s Nikkei was up 0.90%, while the Topix index ended the trading session with an increase of 0.64%.
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