4:05pm: Dow, S&P 500 and Nasdaq all down
US stocks were all in the red at the close on Friday after debt ceiling negotiations screeched to a halt.
As of 4:05pm, the Dow was down 0.3% at 33,427, the S&P 500 had lost 0.1% at 4,192 and the tech-heavy Nasdaq retreated 0.2% at 12,658 points.
Looking ahead, investors will have their eyes on earnings from the likes of Intuit, Lowe's, NVIDIA and Costco, all of which are reporting next week.
There's also Fed meeting minutes due May 24.
"The removal of the language that signalled that more hikes were coming was a notable omission from the Fed statement, and while not inherently dovish, it did strike the right tone in acknowledging the recent change in financial conditions, which are now tighter, without ruling out the possibility that rates could still rise further," CMC Markets chief market analyst Michael Hewson said.
"As we look to this week’s minutes the key question is likely to be how much of a caucus there was for a delay instead of the hike that we got, and whether there was a discussion over how many more rate hikes might be needed or whether we are close to the peak."
12:05pm: Stocks change course as debt ceiling talks hit a roadblock
US stocks turned lower in noon trading after Republican negotiators halted ongoing debt ceiling negotiations.
At midday, the Dow lost 123 points to 33,413, while the S&P 500 eased 6 points at 4,192 and the tech-heavy Nasdaq slipped 25 points to 12,664.
“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 Foot Locker Inc, which sank 25% after the company missed first-quarter revenue and profit expectations.
9:41am: Stocks open softly higher
Shortly after opening, the Dow was up 16 points to 33,551, the Nasdaq Composite added 19 points, 0.2%, to 12,708 and the S&P 500 improved 9 points, 0.2%, to 4,207.
The benchmarks are on pace for weekly gains. The S&P 500 and Nasdaq are up 2% and 3.5%, respectively, this week, which would be each index's biggest one-week gain since March.
Meanwhile, investors are cautiously optimistic that a debt ceiling deal could be reached as soon as next week.
“There is some uncertainty about when the government will be unable to meet its obligations in terms of running out of money, so that does create some uncertainty,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management. “And so, it’s still a risky environment, but one which we believe will ultimately see an outcome that is not too damaging to the markets – on a long-term basis, at least.”
7:50am: Investor attention remains on debt ceiling
US stocks are expected to open slightly higher on Friday morning, carrying on a good rally over the past few sessions amid investor optimism surrounding the debt ceiling situation.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) added 0.2%, while those for the S&P 500 also gained 0.2%, and contracts for the Nasdaq-100 rose 0.1%.
The major Wall Street indexes look to extend Thursday's advances which saw the DJIA rise by more than 115 points, or 0.3% to 33,535, while the S&P 500 and Nasdaq Composite jumped 0.9% and 1.5%, respectively, to hit their highest closing levels since August.
Thursday’s moves boosted the major averages’ weekly gains, with the DJIA up 0.7%, while the S&P 500 is ahead 1.8%, and the Nasdaq Composite up 3.3%, with the last two on track for their best weekly performance since March 31, 2023.
News connected to the debt ceiling continues to dominate investors’ attention as June 1, the earliest day the US could default, fast approaches. Comments from House Speaker Kevin McCarthy on Thursday seemed to suggest a potential deal could come as soon as next week.
Friday marks a light day for economic data, although comments from Federal Reserve chair Jerome Powell and New York Fed president John Williams will be eyed given the other focus remains on interest rates.
Richard Hunter, head of Markets at interactive investor, commented: “Growing optimism for a resolution to the debt ceiling negotiations lifted sentiment, although the mood was slightly tempered by question marks over the Federal Reserve’s next move on interest rates.
"The mood music from the politicians involved in brokering a deal to raise the debt ceiling and avoid an unthinkable US default was more positive, with investors reacting with cautious optimism until such time as a deal is finalised. In the meantime, the subject is an unwelcome distraction as the market grapples with the economic direction of the US over the next few months."
He added: "The weekly initial jobless data showed that fewer than expected citizens filed claims, suggesting that the labour market remains tight. The latest reading raises the conflicting issues of whether the economy is headed for a soft landing before the end of the year, but also how the Federal Reserve could react.
"Indeed, comments from several members over recent days have revealed that the Fed’s next decision will remain data-driven, with more inflation data and a non-farm payrolls release both due before the next meeting in June. Speculation had been that the Fed would choose to pause rate hikes at that meeting, but the Fed has clearly not got the memo.
"The possibility of a hike in June has edged higher, although the consensus remains stuck in the 'pause' camp. At the same time, any hopes for an interest rate cut before the end of the year are diminishing rapidly as the spectre of inflation continues to loom large in the Fed’s thinking."
On the corporate front, Ross Stores shares inched lower in overnight trading after the off-price retailer beat on earnings but shared a cautious outlook, while Applied Materials lost about 1.4% despite an earnings beat.
The tail-end of earnings season continues on Friday with results from Deere and Foot Locker due before the bell.