(Bloomberg) — The stock market fluctuated, with investors waiting for signals on whether Washington lawmakers will reach a deal to avert a US default.
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Equities were little changed as President Joe Biden said he will meet House Speaker Kevin McCarthy and other congressional leaders on Tuesday to discuss a budget deal, with both sides sending mixed signals. The approval of Microsoft Corp.’s $69 billion takeover of Activision Blizzard Inc. by the European Union Monday gave a brief boost to sentiment.
“There is little conviction on either side as the market continues to digest earnings, a slew of economic data, and finger-pointing in Washington regarding the debt ceiling discussions,” said Craig Johnson, chief market technician at Piper Sandler.
To Chris Larkin at E*Trade from Morgan Stanley, it’s fair to ask whether the low equity volatility suggests the market is being too complacent — especially after the US benchmark notched its narrowest non-holiday weekly range since August 2021. “A debt default may not be the most likely scenario, but any prolonged debate or unexpected development has the potential to trigger higher volatility,” he noted.
Morgan Stanley’s Michael Wilson expects the debate around raising the US government’s $31.4 trillion borrowing limit to trigger some sharp swings in equity markets. Most clients “believe it will ultimately get resolved, but not without some near-term volatility,” Wilson wrote in a note, adding that many have framed the event as “a lose-lose for markets.”
Meantime, two Federal Reserve officials signaled they favored pausing interest-rate increases, while a third policymaker suggested the central bank may have more work to do in its inflation fight. And a gauge of New York state manufacturing activity slumped in May by the most in more than three years as orders and shipments shrank abruptly.
Key events this week:
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China retail sales, industrial production, Tuesday
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Eurozone GDP, Tuesday
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US retail sales, industrial production, business inventories, Tuesday
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Fed speakers include Cleveland’s Loretta Mester, New York’s John Williams, Atlanta’s Raphael Bostic and Chicago’s Austan Goolsbee, Tuesday
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Eurozone CPI, Wednesday
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BOE Governor Andrew Bailey delivers keynote speech, Wednesday
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US housing starts, Wednesday
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US initial jobless claims, Conference Board leading index, existing home sales, Thursday
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Japan CPI, Friday
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ECB President Christine Lagarde participates in panel at Brazil central bank conference, Friday
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New York Fed’s John Williams speaks at monetary policy research conference in Washington; Fed Chair Jerome Powell and former chair Ben Bernanke to take part in panel discussion, Friday
Some of the main moves in markets:
Stocks
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The S&P 500 rose 0.1% as of 1:36 p.m. New York time
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The Nasdaq 100 rose 0.3%
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The Dow Jones Industrial Average was little changed
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The MSCI World index rose 0.3%
Currencies
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The Bloomberg Dollar Spot Index fell 0.3%
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The euro rose 0.3% to $1.0878
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The British pound rose 0.6% to $1.2531
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The Japanese yen fell 0.3% to 136.06 per dollar
Cryptocurrencies
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Bitcoin rose 2% to $27,503.17
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Ether rose 2% to $1,834.7
Bonds
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The yield on 10-year Treasuries advanced four basis points to 3.50%
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Germany’s 10-year yield advanced three basis points to 2.31%
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Britain’s 10-year yield advanced four basis points to 3.82%
Commodities
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West Texas Intermediate crude rose 1.7% to $71.22 a barrel
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Gold futures rose 0.2% to $2,024.70 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Isabelle Lee, Peyton Forte and Carly Wanna.
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