As signs in Washington point to a final agreement on raising the nation’s debt limit, the thinking on Wall Street is that any enthusiasm from such a deal may have already passed, or next week’s holiday-shortened four. Trading days will prove to be short-lived. , Similarly, after the immediate excitement around Nvidia’s knockout second-quarter forecast and enthusiasm over all things artificial intelligence subsides, attention will be focused on next Friday’s reading on non-farm payrolls for the month of May (Dow Jones The estimate compiled by WebMD sees 188,000 new jobs), the Federal Reserve’s next policy meeting on June 13-14, and the fact that so many stocks are failing to launch. The latest fear in the trading room is that the economy has proved so resilient recently, with inflation only slowly coming down, that the Fed could raise rates another quarter point, if not at the June meeting, then the 25- In the following meeting on 26th July. The Atlanta Fed’s GDPNow model forecast for second-quarter real GDP growth stood at 1.9% most recently, while the CME FedWatch tool late Friday showed a nearly 67% chance that the Fed would hike by another quarter point in June. Will do and raise the Fed. Funds rate 5.25% to 5.50%. There is also a 25% chance the rate will move from 5.50% to 5.75% by the end of the July meeting, according to the CME. Some of the moves may be linked to sentiment related to the debt ceiling discussions. On top of it all, June is generally a bad month for stocks, yet no matter the split in Washington or the Fed’s tea leaves. “The reason June is usually a weak market is due to the fact that we are midway through first quarter earnings season, which means companies are relatively quiet, leaving investors mostly dependent on political news, which usually There is a risk to the market.” said Jay Hatfield, CEO of Infrastructure Capital Management. “Overhangs on the market this year [are] Debt limit talks, aggressive Fed remarks and a banking crisis. It looks like we are going to get a debt ceiling deal over the weekend which should help stabilize the market. week), the Nasdaq Composite (up nearly 2.5%) and the S&P 500 (with 0.3% gains) hide so much weakness beneath the surface. The S&P 500 Consumer Staples, Materials, Health Care and Utilities were all down. This week between 2.4% and 3.2%, and the Dow Indices were 1% lower. Although the S&P 500 is up 9.5% so far in 2023, only a few stocks are doing well. Shares have been trading below their 200-day moving average since mid-April, Liz Young, head of investment strategy at SoFi, wrote in a blog post on Thursday. What a seasonally loaded time of year for stocks regardless. “Historic Performance” [in June] has been slacking for [the] DJIA and the S&P 500,” wrote Christopher Mistel of the Stock Trader’s Almanac this week, though he noted that performance in such years before presidential election years tends to be stronger. Still, June historically ranked only 11th strongest month of the year for the Dow Industrials, 9th strongest month for the S&P 500 and Russell 1000, and 7th strongest month for the Russell 2000. “In most years the ‘summer rally’ is the weakest of the four. The almanac says, unfortunately, that the market background “remains cautious and still ready for further upside action and a possible pullback or correction in the weak summer months, especially after mid-July, the worst two of the year.” months — in August and September,” Almanac editor-in-chief Jeffrey Hirsch wrote Thursday. Week Ahead Calendar Tuesday 9 AM: S&P/Case-Shiller Home Price Index (March) 10 AM: Consumer Confidence (May) Earnings: HP Inc. , Hewlett Packard Enterprise Wednesday morning 8:45 am: Fed Governor Michelle Bowman speaks 9:45 AM: Chicago PMI (May) 10 AM: JOLTS (April) 1:30 PM: Fed Governor Philip Jefferson speaks 1:30 PM: Philadelphia Fed Chairman Patrick Harker Speaks Earnings: Advanced Auto Parts, Salesforce, NetApp, Raymond James, Donaldson, Capri Holdings, Nordstrom, PVH Corp, CrowdStrike, Okta Thursday 8:15 am: ADP Private Payrolls Report (May) 8: 30: Early Claims (Week Ending May 27) 9:45 am: S&P Global Manufacturing PMI (May) 10 am: ISM Manufacturing (May) 1 pm: Fed’s Harker Speaks Earnings: Dollar General, Broadcom , Cooper Company, Paychex, Macy’s, Five Below, C3.ai, Lululemon, Zumiez Friday 8:30 am: US Jobs Report (May) — CNBC’s Samantha Subin, Fred Imbert and Michael Bloom contributed to this report.
