Stock futures are modestly higher Tuesday morning after a key debt ceiling meeting between President Joe Biden and House Speaker Kevin McCarthy, even though the two did not strike a deal.
Futures tied to the Dow Jones Industrial Average added 30 points, or 0.09%. S&P 500 and Nasdaq-100 futures each also gained 0.13% and 0.19% respectively.
McCarthy and Biden met at the White House Monday evening, in a discussion that the House speaker described as “productive” and “professional.” These latest talks – taking place with just 10 days until June 1, the earliest date that the U.S. could default – seemed to have a more positive tone following the hourlong discussion.
“The president and I know the deadline, so I think we’re going to talk every day… until we get this done,” McCarthy said, noting that both teams would “come back together and work through the night” on a compromise.
Investors have been closely eyeing debt-limit negotiations in Washington, hoping for more certainty as the so-called X-date of June 1 draws closer.
“Certainly, the debt ceiling’s been weighing on investors,” said Phillip Colmar, partner and global strategist at MRB Partners. “It’s probably an 11th-hour deal, but if it is earlier than that, I think that would be encouraging.”
The meeting follows a mixed session for Wall Street as investors followed the latest updates out of resumed debt ceiling negotiations. The Dow lost about 0.4%, while the S&P 500 finished little changed. The Nasdaq Composite advanced 0.5%. The tech-heavy index touched its highest intraday level and highest close since August.
Investors will watch Tuesday for a batch of corporate quarterly earnings from retail stocks including Lowe’s, BJ’s Wholesale and Dick’s Sporting Goods. On the economic front, they will follow morning data on the manufacturing and services sectors as well as new home sales.
–CNBC’s Christina Wilkie contributed to this report.
4 HOURS AGO
New Zealand’s central bank expected to raise rates by 25 basis points to 5.5%
New Zealand’s central bank is expected to raise its benchmark policy rates to 5.5% when it meets Tuesday, according to a Reuters poll of 25 economists.
21 of the economists surveyed expected a hike, while the remainder expected a pause. In the same Reuters poll, the median expected rate hike is 25 basis points.
A rate hike Tuesday would be the Reserve Bank of New Zealand’s 12th since October 2021.
The RBNZ previously surprised investors with a 50 basis points hike to 5.25% in March, when most economists had expected a raise of 25 basis points.
— Lim Hui Jie
6 HOURS AGO
Japan’s factory activity expands for the first time since October 2022: au Jibun bank
Japan’s manufacturing sector recorded an expansion for the first time in seven months, according to flash estimates by the au Jibun Bank.
The manufacturing purchasing managers index came in at 50.8 in May, a reversal from the 49.5 recorded in April, “signalling the first improvement in operating conditions since October 2022,” the report showed. A PMI reading above 50 indicates expansion, while a reading below that level indicates contraction.
The bank noted there were renewed increases in both output and new orders, with both variables rising at the strongest rate for 13 months. Manufacturers indicated that supply chain issues were showing signs of improvement.
Japan’s services PMI was 56.3 in May, higher than the 55.4 seen in April and expanding at the strongest rate since the series began. Composite PMI climbed to 54.9, up from 52.9 in April.
— Lim Hui Jie
7 HOURS AGO
Hong Kong’s inflation rate climbs to 2.1% in April
Hong Kong’s inflation climbed 2.1% in April from a year earlier, slightly above the 2% expected by economists polled by Reuters. April inflation was also higher than the 1.7% recorded in March.
A spokesman for the city’s government said that prices of energy-related items continued to increase sharply year-on-year, as well as costs of clothing and footwear.
The price of electricity, gas and water jumped 17.8%, while clothing and footwear prices climbed 6.4%.
The price of takeaway meals and eating out also rose 4.2%, while “price pressures on other major components remained broadly in check,” the spokesman said.
Moving forward, Hong Kong expects that domestic price pressures may increase alongside the economic recovery. Overall inflation will likely pick up in the rest of 2023, but will remain “largely moderate”.
— Lim Hui Jie
9 HOURS AGO
These are the sectors most likely to be hardest hit in a debt-ceiling drawdown, according to RBC’s Lori Calvasina
Investors have turned their focus on the debt ceiling as the next potential cue for a market decline as President Joe Biden and House Speaker Kevin McCarthy meet Monday evening.
Financials, energy, materials and industrials were among the worst performing sectors in the S&P 500 in previous debt ceiling-related drawdowns, Lori Calvasina of RBC Capital Markets said on CNBC’s “Fast Money” Monday night. She cited the firm’s analysis of drawdowns around the debt ceiling dating back to 2011.
Defensive sectors held up the best during these declines, with health care as the worst performing corner of that sector. Tech and growth sectors were “smack dab in the middle,” said Calvasina, RBC’s head of U.S. equity strategy.
“I do think tech gets hurt, but it probably holds up better than some of those more cyclically oriented areas if we don’t get a deal,” she added.
— Darla Mercado
9 HOURS AGO
McCarthy and Biden meet as debt ceiling looms on markets
President Joe Biden and House Speaker Kevin McCarthy spoke to reporters around when they were scheduled to meet about the debt ceiling.
Biden said he was hopeful about progress and emphasized the need to ensure tax loopholes are closed so wealthy people pay a fair share of taxes. McCarthy said he was looking forward to finding common ground, after saying earlier in the day that decisions have to be made at the meeting.
Investors have been watching for updates on progress out of debt ceiling negotiations amid concerns for what a default could mean for the economy.
— Alex Harring
10 HOURS AGO
Yellen’s latest guidance: ‘Highly likely’ Treasury will be unable to cover debts in early June
Treasury Secretary Janet Yellen has just released a new letter to congressional leaders with updated guidance on the earliest date that the U.S. could be at serious risk of a debt default.
The date remains June 1 in the new letter, the same date it’s been since the start of May. But the new message contains two key differences from a very similar letter Yellen penned on May 15.
“With an additional week of information now available, I am writing to note that we estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government’s obligations if Congress has not acted to raise or suspend the debt limit by earlyJune, and potentially as early as June 1,” writes Yellen.
The phrase “highly likely” is new. Last week Yellen wrote that it was merely “likely.”
Yellen also removed an entire sentence from last week’s letter that said emergency measures Treasury is currently taking could help to push that June deadline out.
“The actual date Treasury exhausts extraordinary measures could be a number of days or weeks later than these estimates,” read Yellen’s May 15 letter to congressional leaders.
The new letter comes as President Joe Biden is about to meet face to face with House Speaker Kevin McCarthy, part of an increasingly urgent effort to reach a bipartisan compromise deal.
— Christina Wilkie
10 HOURS AGO
Stock futures are up slightly
Stock futures were modestly higher shortly after 6 p.m. ET.
Futures tied to the Dow, S&P 500 and Nasdaq 100 were all up 0.1%.
— Alex Harring
Source: CNBC