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Wall Street ended mixed on Monday as investors traded cautiously, keeping an eye on the debt ceiling negotiations. A resolution to the deadlock was eagerly anticipated as President Biden and House Speaker Kevin McCarthy were scheduled to meet on the day. One of the major indexes ended in the red, one in green, while the other remained virtually flat.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.4% or 140.05 points to close at 33,286.58. Twenty-one components of the 30-stock index ended in negative territory, while nine ended in positive.
The S&P 500 remained virtually flat at 4,192.63. Six of the 11 broad sectors of the benchmark index ended in positive territory. The Communication Services Select Sector SPDR (XLC), the Real Estate Select Sector SPDR (XLRE) and the Technology Select Sector SPDR (XLK) gained 0.9%, 0.7% and 0.2%, respectively, while the Consumer Staples Select Sector SPDR (XLP) lost 1.5%.
The tech-heavy Nasdaq advanced 62.88 points, or 0.5%, to finish at 12,720.78.
The fear-gauge CBOE Volatility Index (VIX) was up 2.4% at 17.21. A total of 9.6 billion shares were traded on Monday, lower than the last 20-session average of 10.6 billion. Advancers outnumbered decliners on the NYSE by a 1.54-to-1 ratio. On the Nasdaq, a 1.74-to-1 ratio favored advancing issues.
Biden and McCarthy Meet to Discuss Debt Ceiling
On Monday, all eyes were set on President Biden and Republican House Speaker Kevin McCarthy, who were supposed to discuss and negotiate on the debt ceiling issue. Market participants remained worried that any breakdown in talks would almost certainly push the country toward a debt default and the economy into an inevitable recession. As is, the window for negotiations is narrowing by the day, with less than 10 days to go for Jun 1, the date cited by the treasury as the day the government would default.
However, McCarthy and Biden spoke to the media after their call and reassured the nation that they were satisfied with the chat, and staff level talks would reconvene on the same day. The two leaders would talk again on Tuesday.
If Washington does default on Jun 1, the fallout might be catastrophic. The treasury would run out of cash, and the spending obligations made by the Congress in fields like medicare, education and to veterans will stop. But what the market fears the most is that the default would push the central bank toward higher interest rates. The interest rate regime is currently at a multi-decade high, and could do with some cuts, not hikes.
What also did not help was that St. Louis Fed President James Bullard said on Monday that the Federal Reserve may still need to raise its benchmark interest rate by another half a point this year.
News From PacWest Arrests Regional Banking Slide
Regional banking stocks resumed on their road to recovery with good news from PacWest Bancorp , that it would sell its portfolio of 74 real estate construction loans to an undisclosed subsidiary of Kennedy-Wilson Holdings, Inc. (KW - Free Report) . The major regional bank’s shares shot up by almost a fifth of its value, 19.6%, and triggered a rally in regional banks. PacWest has been one of the hardest-hit banks in the crisis. Kennedy-Wilson’s shares gained 3.3%.
Image: Bigstock
Stock Market News for May 23, 2023
Wall Street ended mixed on Monday as investors traded cautiously, keeping an eye on the debt ceiling negotiations. A resolution to the deadlock was eagerly anticipated as President Biden and House Speaker Kevin McCarthy were scheduled to meet on the day. One of the major indexes ended in the red, one in green, while the other remained virtually flat.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.4% or 140.05 points to close at 33,286.58. Twenty-one components of the 30-stock index ended in negative territory, while nine ended in positive.
The S&P 500 remained virtually flat at 4,192.63. Six of the 11 broad sectors of the benchmark index ended in positive territory. The Communication Services Select Sector SPDR (XLC), the Real Estate Select Sector SPDR (XLRE) and the Technology Select Sector SPDR (XLK) gained 0.9%, 0.7% and 0.2%, respectively, while the Consumer Staples Select Sector SPDR (XLP) lost 1.5%.
The tech-heavy Nasdaq advanced 62.88 points, or 0.5%, to finish at 12,720.78.
The fear-gauge CBOE Volatility Index (VIX) was up 2.4% at 17.21. A total of 9.6 billion shares were traded on Monday, lower than the last 20-session average of 10.6 billion. Advancers outnumbered decliners on the NYSE by a 1.54-to-1 ratio. On the Nasdaq, a 1.74-to-1 ratio favored advancing issues.
Biden and McCarthy Meet to Discuss Debt Ceiling
On Monday, all eyes were set on President Biden and Republican House Speaker Kevin McCarthy, who were supposed to discuss and negotiate on the debt ceiling issue. Market participants remained worried that any breakdown in talks would almost certainly push the country toward a debt default and the economy into an inevitable recession. As is, the window for negotiations is narrowing by the day, with less than 10 days to go for Jun 1, the date cited by the treasury as the day the government would default.
However, McCarthy and Biden spoke to the media after their call and reassured the nation that they were satisfied with the chat, and staff level talks would reconvene on the same day. The two leaders would talk again on Tuesday.
If Washington does default on Jun 1, the fallout might be catastrophic. The treasury would run out of cash, and the spending obligations made by the Congress in fields like medicare, education and to veterans will stop. But what the market fears the most is that the default would push the central bank toward higher interest rates. The interest rate regime is currently at a multi-decade high, and could do with some cuts, not hikes.
What also did not help was that St. Louis Fed President James Bullard said on Monday that the Federal Reserve may still need to raise its benchmark interest rate by another half a point this year.
News From PacWest Arrests Regional Banking Slide
Regional banking stocks resumed on their road to recovery with good news from PacWest Bancorp , that it would sell its portfolio of 74 real estate construction loans to an undisclosed subsidiary of Kennedy-Wilson Holdings, Inc. (KW - Free Report) . The major regional bank’s shares shot up by almost a fifth of its value, 19.6%, and triggered a rally in regional banks. PacWest has been one of the hardest-hit banks in the crisis. Kennedy-Wilson’s shares gained 3.3%.
Consequently, shares of U.S. Bancorp (USB - Free Report) and Western Alliance Bancorporation (WAL - Free Report) gained 2.7% and 10.3%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
No economic data was released on Monday.