Debt Ceiling Talks In Focus Amid Cautious Optimism On Wall Street

Barry Adams
18 May, 2023
New York City

Stocks on Wall Street retained upward bias on the hopes that lawmakers are closer to an agreement on the U.S. debt ceiling. 

The S&P 500 index and the Nasdaq Composite index traded higher led by regional banks, technology and resource stocks. 

Energy and commodities gained in the early trading on the hopes of higher demand from China and Asia as economies in the region continue to expand at a faster clip. 

Investors have been increasing exposure to stocks in cautious trading on the hopes that President Biden and House Speaker Kevin McCarthy are likely to strike an agreement as early as this weekend, just in time to avert catastrophic debt default. 

Despite the prevailing optimism, any agreement between the two leaders needs approvals from the U.S. House and the Senate in the next two weeks. 

A faction of the Republican Party in the U.S. House is not fully on board to lift the debt ceiling, and a last minute disagreement could derail a compromise struck between the two leaders. 

In overseas trading, European markets soared 1.5% and traded near record highs on the hopes that the U.S. lawmakers will set aside differences and come to an agreement. 

Markets in Tokyo extended recent gains to a new 32-year high and indexes in India inched closer to record highs but indexes in Hong Kong and Shanghai traded lower on the worries of uneven economic rebound. 

 

Initial Weekly Jobless Claims Unexpectedly Declined 

Initial jobless claims for the week ending on May 13 declined 22,000 to 242,000, the U.S. Labor Department reported Thursday. 

The 4-week moving average was 244,250, a decline of 1,000 from  the previous week's unrevised average of 245,250. 

The jobless claims unexpectedly declined in the previous week, indicating labor market conditions remained tight and upward wage pressures are likely to persist. 

The advance number for seasonally adjusted insured unemployment during the week ending May 6 was 1,799,000, a decrease of 8,000 from the previous week's revised level. 

The previous week's level was revised down 6,000 from 1,813,000 to 1,807,000. 

 

U.S. Indexes & Yields 

The S&P 500 index decreased 0.2% to 4,162.10 and the Nasdaq Composite fell 0.04% to 12,468.03.

The yield on 2-year Treasury notes increased to 4.18%, 10-year Treasury notes edged up to 3.60% and 30-year Treasury bonds held at 3.89%. 

Crude oil fell $0.25 to $72.56 a barrel and natural gas prices rose 3 cents to $2.39 a thermal unit. 

 

U.S. Stock Movers 

Walmart Inc increased 1.9% to $151.45 after the retailer said revenue in the first quarter increased 7.6% to $152.3 billion. 

U.S. comparable same store sales increased 7.4%, driven by 2.9% increase in number of transactions and 4.4% rise in average ticket size. 

Net income in the quarter decreased 18.5% to $1.7 billion from $2.1 billion and diluted earnings per share declined to 62 cents from 74 cents a year ago. 

The company forecasted consolidated store sales to increase 4.0% in the second quarter and 3.5% in the fiscal year 2024. 

Take Two Interactive Software, Inc soared 12.8% to $141.0 after the videogame developer reported higher-than-expected revenue in the fiscal fourth quarter. 

Revenue in the fourth quarter ending in March increased 56% to $1.45 billion from $930 million and the company swung to a net loss of $610.3 million from a profit of $110.9 million and diluted earnings per share was ($3.62) from 96 cents a year ago. 

The company forecasted net revenue in the fiscal year 2024 between $5.37 billion and $5.47 billion net loss range from $518 million to $477 million and net loss per share between $3.05 and $2.80.   

Bath & Body Works Inc soared 12.5% to $38.32 after the specialty retailer reported higher-than-expected revenue and earnings in its latest quarter. 

Synopsys Inc increased 2.7% to $387.48 after the electronic design automation software developer reported quarterly results that were ahead of expectations. 

Revenue in the fiscal second quarter ending in April increased to $1.40 billion from $1.28 billion a year ago. 

Net income in the quarter decreased to $269.9 million from $293.8 million and diluted earnings per share fell to $1.76 from $1.89 a year ago. 

The company forecasted revenue in the fiscal third quarter ending in July between $1.465 billion and $1.495 billion and earnings per share between $1.88 and $1.99. 

Cisco Systems Inc declined 4.2% after the networking gear maker reported better-than-expected revenue and earnings in the fiscal third quarter. 

Revenue increased 14% to $14.6 billion and net income increased to $3.2 billion from $2.6 billion and diluted earnings per share rose to 78 cents from 65 cents a year ago.