Marketbites: U.S. Economic Activity Rising at Strong Pace
MARKET PERFORMANCE:
Portfolio Manager Commentary:
The Dow Index fell for a fourth straight day as U.S. lawmakers struggled to reach a deal on the country’s debt ceiling, heightening worries of a potential default. House Speaker Kevin McCarthy said in a late-morning press conference that negotiators remain at odds on spending caps, and blamed the Democrats for coming to the table so late in the process. McCarthy also said that he believes the negotiating teams could make progress. “I just think it’s common sense. It’s reasonable and it’s rational that we spend less next year than we spend this year. Every household would do this,” he said.
Stocks hovered near their lows even as minutes released from the Federal Reserve’s latest meeting signaled more “uncertainty” as to whether the central bank should hike again in June. The minutes indicated that a decision to increase rates at the next meeting would ultimately hinge on upcoming data releases.
The tail-end of earnings season stretched on with Kohl's and Abercrombie & Fitch popping 7.5% and 31.1%, respectively, after posting surprise profits. Semiconductor giant Nvidia reported after the bell with a stronger-than-expected forecast that drove shares up 15% in after-hours trading.
Chart of the Day:
U.S. economic activity rose in May to the highest pace in 13 months, showing persistent resilience to rising interest rates and high inflation ahead of a debt-ceiling deadline that threatens to bring the expansion to a halt. Economic output in the U.S. posted the sharpest rise this month since April 2022, according to data firm S&P Global’s surveys of purchasing managers released Tuesday. The gain was led by service-providing businesses, which reported stronger demand for travel, dining out, and other leisure activities. The improvement was offset by cooling activity among U.S. manufacturers.
Source: WSJ
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