4:08pm: Walmart helps the Dow close higher
The Dow closed Thursday up 115 points, 0.2%, at 33,536, the Nasdaq Composite added 188 points, 1.5%, to 12,689 and the S&P 500 improved 39 points, 0.9%, to 4,198. The small-cap Russell 2000 index climbed 10 points, 0.5%, to 1,784.
The DJIA spent much of the day underwater but managed to eke out a winning day. Walmart shares rose 1.3% to $151.50 after the retailer beat expectations on revenue and earnings in the first quarter and upped its guidance for the year.
Also helping matters were comments from House Speaker Kevin McCarty that negotiations regarding the debt ceiling are progressing.
“I see the path that we can come to an agreement,” McCarthy said. “And I think we have a structure now and everybody’s working hard, and I mean, we’re working two or three times a day, then going back getting more numbers.”
On the other hand, comments from Dallas Federal Reserve president Lorie Logan may have harmed sentiment. In her view, the latest economic data doesn’t yet justify a pause in rate hikes yet.
The June policy decision will be based on inflation and employment data that have yet to be released, Logan noted.
“As financial markets have been obsessing about the state of debt ceiling negotiations, the airwaves have also hosted an onslaught of Fed speakers, who have seemingly been tasked with sending a message to the markets,” said Quincy Krosby, chief global strategist at LPL Financial. “The message, that the Fed, at this point, has no plans to cut rates this year, but now also introducing the possibility that another rate hike could be forthcoming at the June 13-14 meeting
12.05pm: Tech stocks climb on House Speaker hopes for debt ceiling deal
US stocks were mixed in noon trading after House Speaker Kevin McCarthy said he’s optimistic congressional negotiators could reach a deal in time for a House vote next week.
At midday, the Dow lost 86 points to 33,335, while the S&P 500 added 17 points at 4,176 and the tech-heavy Nasdaq rose 136 points to 12,636.
“I think the debt ceiling is personally a lot of noise, but I think investors and even traders are having a hard time ignoring,” KKM Financial CEO Jeff Kilburg said.
Notable movers included shares of Walmart Inc, which moved up more than 1% after the retail giant beat Wall Street estimates on both earnings per share and revenue in its first quarter and raised its expectations for full-year results.
9:40am: Walmart earnings top expectations
US stocks were mixed at the open as politicians progress negotiations on the country’s debt ceiling while investors digested new economic data.
Just after the opening bell in New York, the Nasdaq had added 22 points or 0.2%, while the Dow Jones had fallen 105 points or 0.3% and the S&P 500 had slipped 4 points or 0.1% at 4,155 points.
Alibaba’s US-listed shares had fallen 3.7% to US$87.26 after the Chinese e-commerce giant posted a quarterly revenue miss, while Walmart added 2.8% to US$153.82 after posting a 1Q earnings beat.
On the economic data front, initial jobless claims for last week fell to 242,000 from 264,000, below the consensus expectation of 251,000.
Pantheon Macroeconomics chief economist Ian Shepherdson said that fraudulent claims were likely still distorting the data.
“The headline claims numbers right now are hard to read because Massachusetts has reported a wave of large-scale fraudulent claims based on identity theft. Other states might also suffer from the same problem - Kentucky has acknowledged a problem - but we have no way of knowing for sure,” he said.
“The bottom line is that right now we don’t know for sure what’s happening to initial claims, but we do have plenty of other evidence - the Challenger numbers and the weakening NFIB hiring intentions measure are the two most important - that the labor market is weakening.”
Meanwhile, the May Philadelphia Fed manufacturing index rose to -10.4 from -31.2, above the consensus expectation of -19.9.
Pantheon Macroeconomics chief US economist Kieran Clancy noted the report was still consistent with a recession, and likely to drop back again before too long.
“The increase in the Philly Fed index also contrasts with the plunge in the Empire State index, another reminder to interpret monthly moves in the regional manufacturing surveys with a healthy dose of skepticism,” Clancy said.
7:50am: Optimism on potential debt ceiling resolution
US stocks look set to start modestly higher on Thursday morning following strong gains in the previous session amid hopes that the US debt ceiling crisis would soon see a resolution.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were up 0.1%, while those for the S&P 500 added 0.2%, and contracts for the Nasdaq 100 also gained 0.2%.
All the major indexes ended sharply higher on Wednesday, with the DJIA closing up 1.2%, while the S&P 500 also rose 1.2%, and the Nasdaq Composite gained 1.3%. A rebound in regional bank shares also contributed to Wednesday’s rally with Western Alliance shares jumping more than 10%.
Investor sentiment rose after House Speaker Kevin McCarthy told CNBC’s 'Squawk Box' that he does not believe the US will default on its debt. President Joe Biden also stated in later remarks that he was confident lawmakers would come together to reach a deal and avoid a default.
On the economic front Thursday, investors will eye the latest weekly jobless claims numbers, as well as the Philadelphia Fed’s manufacturing survey for May, and existing home sales data for April.
TickMill Group’s market analyst Patrick Munnelly commented: "The initial jobless claims figures have shown an uptick of late, indicating a potential slowdown in the labour market. The regional manufacturing surveys have exhibited volatility but have generally indicated a downward trend. However, there is potential for an improvement in the Philadelphia Fed survey following last month's unexpectedly weak outcome."
He added: "There is a bevy of Federal Reserve speakers on deck today. Fed Vice Chair nominee Jefferson, a voting member with a neutral stance, will deliver a speech on the Economic Outlook. Fed's Barr, another voting member with a neutral stance, will provide the second part of his testimony at the Senate Banking Committee. Additionally, Fed's Logan, who is a voter in 2023 and holds a neutral stance, will also deliver remarks."
Retail behemoth Walmart and China-based tech giant Alibaba are set to report corporate earnings before the opening bell on Thursday.