As signs in Washington point to a possible deal on raising the national debt ceiling, Wall Street thinks any euphoria of such a deal may have already happened or will be short-lived over the holidays. next week, shortened by four trading days. Likewise, once the immediate euphoria surrounding Nvidia’s Q2 forecast and enthusiasm for all things AI wears off, attention will turn to next Friday’s reading on the mass nonfarm payrolls for the month of May (the estimate compiled by Dow Jones sees 188,000 new jobs), the upcoming Federal Reserve policy meeting on June 13-14, and the nagging fact that so many stocks are failing to throw. The latest fear in the trading rooms is that the economy has proved so resilient lately, with inflation only slowly falling, that the Fed could raise rates another quarter point, if not during the June meeting, then at the following one on July 25 and 26. The Atlanta Fed’s GDPNow model estimate for second-quarter real gross domestic product growth most recently stood at 1.9%, while the CME tool FedWatch showed nearly 67% on Friday evening. chance the Fed will hike a quarter point in June and raise the fed funds rate. at 5.25% to 5.50%. There is even a 25% chance that the rate will be 5.50% to 5.75% by the end of the July meeting, according to the CME. Some of this movement could be tied to sentiment related to the debt ceiling talks. To top it all off, June is usually a lousy month for stocks anyway, no matter the machinations in Washington or the Fed tea leaf divination. “The reason June is generally a weak market is because we’re in Q1 earnings season, which means companies are relatively quiet, which leaves investors dependent primarily on policy news, which is generally a risk to the market,” said Jay Hatfield, CEO of Infrastructure Capital Management. “The overhangs on the market this year [are] the debt ceiling negotiation, hawkish comments from the Fed and a banking crisis. It looks like we’re going to get a debt ceiling deal over the weekend, which should help the market stabilize.” The problem for many on the street is the S&P stock. 500 Tech, up more than 5% this week; the Nasdaq Composite, ahead about 2.5%; and the S&P 500, with a 0.3% gain, masks so much weakness below the surface The S&P 500 Consumer Staples, Materials, Health Care and Utilities all fell between 2.4% and 3.2% this week, and the Dow Industrials was down 1%. up 9.5% so far in 2023, only a few stocks are doing well.” The number of stocks trading above their 200-day moving average has declined since mid-April,” said writes Liz Young, head of investment strategy at SoFi, in a blog post on Thursday. “Despite the market rally over the past month and changes, the strength below the surface has actually deteriorated.” All of this comes at a time of year characterized by seasonal variations for stocks, whatever. [in June] has been lukewarm for [the] DJIA and S&P 500,” Christopher Mistal of the Stock Trader’s Almanac wrote this week, though he noted that performance in years like this, before presidential election years, tended to be stronger. Yet June is historically only ranked the 11th strongest month of the year for the Dow Industrials, ninth for the S&P 500 and Russell 1000, and 7th for the Russell 2000. “The ‘rally of ‘summer’ most years is the weakest rally of the four seasons,” the almanac says. Unfortunately, the market backdrop “remains cautious and still braces for further sideways action and a likely pullback or correction in the during the weak summer months, especially after mid-July in the two worst months of the year – August and September,” the almanac’s editor-in-chief Jeffrey Hirsch wrote Thursday. , Hewlett Packard Enterprise Wednesday 8:45 a.m.: Speech by Fed Governor Michelle Bowman 9:45 a.m.: Chicago PMI (May) 10 a.m.: JOLTS (April) 1:30 p.m.: Speech by Fed Governor Philip Jefferson 1:30 p.m.: Chairman Philadelphia Fed Patrick Harker speaks Earnings: Advance Auto Parts, Salesforce, NetApp, Raymond James, Donaldson, Capri Holdings, Nordstrom, PVH Corp., CrowdStrike, Okta Thursday 8:15 a.m.: ADP Private Payroll Report (May) 8:30 a.m. : Initial Claims (week ending May 27) 9:45 a.m.: S&P Global Manufacturing PMI (May) 10 a.m.: Manufacturing ISM (May) 1 p.m.: Fed Harker Talks Earnings: Dollar General, Broadcom, Cooper Companies, Paychex, Macy’s, Five Below, C3.ai, Lululemon, Zumiez Friday 8:30 a.m.: US Jobs Report (May) — CNBC’s Samantha Subin, Fred Imbert and Michael Bloom contributed to this report.
