Markets moved in sync last week with perceived movement in debt ceiling talks, weakening early in the week and then surging on news of progress. A solid quarterly report and guidance from a mega-cap technology company helped with enthusiasm.
Overall, the markets were mixed, with the Dow Jones Industrial Average down 1.00%, while the Standard & Poor’s 500 gained 0.32%. The Nasdaq Composite index led, picking up 2.51% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, sank 2.92%.1,2,3
Debt Talks Dominate
Stocks were weighed down for much of the week by stumbling debt ceiling negotiations, which appeared to reach an impasse at one point. Technology stocks, which have led the market this year, were under pressure as traders began to anticipate the possibility of rate hikes in June and July.
Sentiment turned more optimistic after the release of an above-consensus earnings report and strong guidance from a mega-cap chip giant. The momentum continued into Friday as stocks surged on hopes of a debt ceiling agreement, undeterred by an inflation read that may induce the Fed to raise interest rates further.
A Fed Divided
The minutes of the Federal Open Market Committee (FOMC) May meeting reflected division among committee members over whether further rate increases were necessary, with more than half suggesting that they were ready to pause. Those members supporting additional rate hikes said inflation was moving too slowly toward the Fed’s two percent target inflation rate.
The minutes also reaffirmed the Fed’s expectation of a recession beginning around the fourth quarter. In comments last Wednesday, Fed governor Christopher Waller manifested this division, saying that it was a toss-up as to whether rates should be raised, suggesting that he could support a rate hike in June or wait on voting for an increase until July’s meeting.
This Week: Key Economic Data
Tuesday: Consumer Confidence.
Wednesday: Job Openings and Labor Turnover (JOLTS).
Thursday: Automated Data Processing (ADP) Employment Report. Jobless Claims. Institute of Supply Management (ISM) Manufacturing Index.
Friday: Employment Situation.
Source: Econoday, May 26, 2023
This Week: Companies Reporting Earnings
Tuesday: HP, Inc. (HPQ)
Wednesday: Salesforce, Inc. (CRM), CrowdStrike (CRWD)
Thursday: lululemon athletica, inc. (LULU), Broadcom, Inc. (AVGO), Dollar General Corporation (DG), Dell Technologies, Inc. (DELL)
Source: Zacks, May 26, 2023
"I can make it through the rain, I can stand up once again on my own, and I know that I'm strong enough to mend."
– Mariah Carey
Be On Alert for IRS Scams
The Internal Revenue Service is on a constant lookout for tax-related scams. In most cases, “phishing” scams are bogus phone calls and emails that claim to come from the IRS.
Remember, the IRS will never:
Footnotes and Sources
2. The Wall Street Journal, May 26, 2023
3. The Wall Street Journal, May 26, 2023
4. IRS.gov, April 24, 2023
5. Everyday Health, February 15, 2023
Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.
The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.
The market indexes discussed are unmanaged, and generally, considered representative of their respective markets. Index performance is not indicative of the past performance of a particular investment. Indexes do not incur management fees, costs, and expenses. Individuals cannot directly invest in unmanaged indexes. Past performance does not guarantee future results.
The Dow Jones Industrial Average is an unmanaged index that is generally considered representative of large-capitalization companies on the U.S. stock market. Nasdaq Composite is an index of the common stocks and similar securities listed on the NASDAQ stock market and is considered a broad indicator of the performance of technology and growth companies. The MSCI EAFE Index was created by Morgan Stanley Capital International (MSCI) and serves as a benchmark of the performance of major international equity markets, as represented by 21 major MSCI indexes from Europe, Australia, and Southeast Asia. The S&P 500 Composite Index is an unmanaged group of securities that are considered to be representative of the stock market in general.
U.S. Treasury Notes are guaranteed by the federal government as to the timely payment of principal and interest. However, if you sell a Treasury Note prior to maturity, it may be worth more or less than the original price paid. Fixed income investments are subject to various risks including changes in interest rates, credit quality, inflation risk, market valuations, prepayments, corporate events, tax ramifications and other factors.
International investments carry additional risks, which include differences in financial reporting standards, currency exchange rates, political risks unique to a specific country, foreign taxes and regulations, and the potential for illiquid markets. These factors may result in greater share price volatility.
Please consult your financial professional for additional information.
This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.
Copyright 2023 FMG Suite.
Weekly Market Insights: Debt Talks Optimism Keeps Eyes on D.C.
May 30, 2023|