Next week hints at short-lived debt deal relief as jobs report looms

As signs in Washington point to a final agreement on raising the nation’s debt limit, the thinking on Wall Street is any enthusiasm from such a deal that has already been done, or next week’s holiday-shortened , would prove short-lived at four trading days. 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 sees 188,000 new jobs), the Federal Reserve’s next policy meeting on June 13-14, and so many stocks have failed to launch. The latest fear in the trading room is that the economy has proved so resilient recently, with inflation only slowly easing, that the Fed could raise rates another quarter point, if not at the June meeting, then 25-26. At the next meeting in July. The Atlanta Fed’s GDPNow model forecast for real GDP growth in the second quarter was most recent at 1.9%, while the CME FedWatch tool showed a nearly 67% chance late Friday that the Fed would raise another quarter point in June and that Fed funds Will raise the rate. 5.25% to 5.50%. According to the CME, there is also a 25% chance that the rate will move from 5.50% to 5.75% by the end of the July meeting. 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 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. the Nasdaq Composite, up about 2.5%; And the S&P 500, with a 0.3% gain, hides so much weakness beneath the surface. The S&P 500 Consumer Staples, Materials, Health Care and Utilities were all down 2.4 percent. % and 3.2%, and the Dow Industrials were down 1% this week. Although the S&P 500 is up 9.5% so far in 2023, only a few stocks are doing well. “The moving averages have been trending lower since mid-April,” Liz Young, head of investment strategy at SoFi, wrote in a blog post on Thursday. All of that comes at a seasonally fraught time of year for stocks, regardless. “Historic Performance” has been slacking for The DJIA and the S&P 500,” wrote Christopher Mistel of the Stock Trader’s Almanac this week, although he has noted the performance in years prior to presidential election years, such as this one, has a tendency to strengthen. 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. The “summer rally” is the strongest month in all four years in most years. Weakest rally of the session. Unfortunately, the market backdrop “remains cautious and is still poised for further upside action and a possible pullback or correction in the weak summer months, especially after mid-July of the year.” Worst two months — August and September,” Almanac editor-in-chief Jeffrey Hirsch wrote Thursday. Week-ahead calendar Tuesday 9 a.m.: S&P/Case-Shiller Home Price Index (March) 10 a.m.: Consumer confidence ( May) Earnings: HP Inc. , Hewlett Packard Enterprise Wednesday 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 am 1:30 pm: Philadelphia Fed President Patrick Harker Speaks Earnings: Advance Auto Parts, Salesforce, NetApp, Raymond James, Donaldson, Capri Holdings, Nordstrom, PVH Corp, CrowdStrike, Okta Thursday 8:15 am: ADP Private Payroll Report (May) 8:30 am: Early Claims (week ending May 27) 9:45 am: S&P Global Manufacturing PMI (May) 10 am: ISM Manufacturing (May) 1 pm: Fed’s losers speak Earnings: Dollar General, Broadcom, Cooper Companies, 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 report this Contributed to the report.