Market Concerns Over Debt Ceiling Deal Lead to Slide in S&P and Nasdaq Despite Strong Weekly Performance
The S&P and Nasdaq are on track for their strongest weekly performances since March, supported by positive corporate earnings. Still, both indexes slid in the Friday session amid market concerns about the new debt ceiling deal.
Stocks had rallied in the previous two sessions, driven by optimism about a potential deal to raise the debt limit. During this period, the S&P 500 had gained over 2%, and the Nasdaq was boosted by a better 9% increase in Netflix price shares.
U.S. stocks initially rose but later turned lower due to reports of a pause in talks to raise the debt ceiling.
As of 15:40 New York am ET, the Dow Jones Industrial Average was down by 0.33 to 33.424.55 basis points. The S&P 500 benchmark slides down by 0.15% to 4.192.21 basis points. Additionally, the Nasdaq Composite was down 0.3% to 12.650.40 basis points.
Following their significant 9% increase on Thursday, Netflix shares declined by 1.7% in the Friday trading session. Thursday’s surge marked the best intraday stock performance since October 2022 and the highest closing since April 2022.
Its momentum was driven by Netflix’s announcement of its ad-based plan called “Basic with Ads,” which has attracted 5 million global monthly active users. Netflix Worldwide Advertising President Jeremi Gorman emphasized the importance of this metric for advertisers. The ad tier was introduced in November.
In keeping with individual stock gains and losses in Friday’s session, the tech stock market remains bullish as optimism fades over the debt ceiling deal.
Amazon and Meta both retired an average of 0.8% and 1.7% declines in today’s ongoing session, respectively. Tesla Inc. counts its positive momentum following its shareholders meeting.
Negotiations to raise the debt ceiling were put on hold, reversing expectations of a deal being reached over the weekend. In some particular sense, that was not surprising for some, especially Democrats. Based on House Speaker McCarthy, the negotiations were going on the obvious track, the put-on-hold track.
President Joe Biden is expected to provide an update on the progress of the talks after returning from the Group of Seven summit in Japan.
The U.S. has until early June to reach a deal before it runs out of options to meet its financial obligations.
Federal Reserve Chair Jerome Powell suggested that interest rates may not need to rise as much as expected due to credit availability constraints in the banking sector. Moving to retail earnings reports, the recent reports included the following data:
Due to increased farm incomes, Deere raised its annual profit forecast, but its shares dipped 2.3%.
Foot Locker experienced a 26% drop in its shares after cutting its annual sales and profit forecasts, indicating a decline in demand despite discounts.
Morgan Stanley shares were affected by CEO James Gorman’s announcement to step down within the next year, causing a 2.5% fall.