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Debt Ceiling Negotiations and Economic Data Influence Stock Market, Retail Reports Awaited


Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.

The S&P 500 experienced a slight increase at the beginning of the week as traders analyzed ongoing negotiations regarding the debt ceiling. The broader index rose by 0.3% to reach 4,136.28 points. Meanwhile, the Dow Jones Industrial Average ended its five-day losing streak, gaining 47.98 points (0.14%) and reaching 33,348.60 points. The tech-heavy Nasdaq Composite outperformed both indices, rising by 0.66% to reach 12,365.21 points. The focus for investors was on the debt ceiling talks, which were rescheduled to this week after being postponed from Friday. President Joe Biden is expected to meet with top congressional leaders on Tuesday to discuss this matter.

Investors are closely monitoring the debt ceiling negotiations, as failure to reach an agreement could have severe financial consequences. Treasury Secretary Janet Yellen warned that a failure to address the debt ceiling could lead to “financial chaos.” However, Yellen expressed optimism over the weekend, stating that negotiations were active and that areas of agreement had been found. The market remains cautious, as each day of delay and lack of progress makes it increasingly challenging for the market to gain momentum. Additionally, investors are analyzing the latest economic data, including the May data for the Empire State Manufacturing survey, which showed a significant decline in manufacturing activity in New York. Throughout the week, investors will also be paying attention to major retail reports from Home Depot, Target, and Walmart, which will provide further insight into the state of the consumer.

Data by Bloomberg

On Monday, the stock market witnessed varied price changes across different sectors. Overall, the market experienced a positive trend with an increase of 0.30%. The materials sector performed particularly well, showing a significant rise of 0.85%. Financials and information technology sectors also displayed strong gains, with increases of 0.82% and 0.74% respectively. Industrials saw a moderate increase of 0.51%. However, energy and consumer discretionary sectors had more modest gains of 0.20% and 0.14% respectively. On the other hand, the communication services sector experienced a slight decline of -0.03%. Health care, real estate, consumer staples, and utilities sectors witnessed negative trends, with price decreases of -0.16%, -0.24%, -0.27%, and -1.24% respectively.

Major Pair Movement

On Monday, the US dollar retreated across the board after last week’s risk-off gains, as investors prepared for the upcoming US retail sales report and debt ceiling talks. Market sentiment was mixed as a volatile NY Fed report was met with caution, and several Federal Reserve speakers pushed back against expectations of rate cuts. The dollar index lost 0.25%, while the euro gained in response.

The Australian dollar, considered a high-beta currency, rebounded strongly against the low-beta yen, with AUD/JPY rising over 1% compared to USD/JPY’s modest 0.22% gain. The market remained hopeful that China would increase stimulus measures to support economic growth, and there was speculation that the US would avoid a debt default, boosting risk appetite. Additionally, there was a bounce in US bank stocks, contributing to the positive risk sentiment.

The British pound rallied throughout the day, influenced by risk acceptance flows and anticipation of employment and wage data that could support the Bank of England’s rate hiking stance. The Japanese yen’s gains were limited as the government showed lukewarm reception to the Bank of Japan’s policy review, reducing expectations of accommodative measures being scaled back.

Make informed decisions with the most up-to-date and reliable financial data, exclusively provided by vtmarkets.com.

Economic Data

CurrencyDataTime (GMT + 8)Forecast
GBPClaimant Count Change14:000.0%
CADConsumer Price Index20:300.5%
USDRetail Sales20:300.8%