Five things you need to know before the market opens on Tuesday, May 30:
1. Equity futures are cautiously higher in a debt ceiling deal
Wall Street futures rose on Tuesday, while the dollar rose to two-month highs and Treasury yields slumped, as markets reacted to news of a debt ceiling deal that could avert a default in the United States and curb government spending over the next two years.
The agreement, reached after weeks of talks between President Joe Biden and House Speaker Kevin McCarthy, would cap US spending at current levels for fiscal 2024, up just 1% for 2025, while increasing military spending by 3% and cutting billions. In a planned investment in the Internal Revenue Service.
“The agreement prevents the worst possible crisis, default, for the first time in our nation’s history,” Biden told reporters at the White House late Sunday. “It takes the risk of catastrophic default off the table.”
With congressional rules dictating that lawmakers need at least 72 hours to read and analyze any given bill, the House of Representatives is expected to vote on the proposals as soon as Wednesday, and the Senate shortly thereafter.
Passage was not confirmed, however, with lawmakers on both sides of the aisle expressing disappointment with the reported terms of the agreement, including moderate Democratic Congressman Jim Himes of Connecticut and Republican Matt Rosendell of Montana.
Still, investors were cautiously optimistic that the deal might find enough support to pass through, with traders putting one-month Treasury notes down about 20 basis points in an overnight trade at 5.805% as the dollar index, which tracks the greenback against a basket of six, pushed back. global currencies, to a two-month high of 104,283.
Yields on the benchmark 2-year Treasury fell to 4.514% while the 10-year note fell to 3.725%, although traders will be watching closely for signs of new supply as the Treasury looks to replenish its reserves with about $1 trillion in new notes, note and Bond sales in the coming months.
Meanwhile, oil prices fell significantly in overnight trading, even in the wake of last week’s warning from the Saudi Oil Ministry against speculators betting on crude oil prices, with West Texas Intermediate crude futures for July delivery down $1.62 to $71.34 a barrel.
As the trading day begins on Wall Street, futures linked to the S&P 500 index were priced at an opening bell profit of 24 points while those linked to the Dow Jones Industrial Average were priced for an 85-point move to the upside. Technology-focused Nasdaq was looking forward to a 163-point advance thanks in part to pre-market gains for chipmakers such as Nvidia, Advanced Micro Devices and Intel.
European stocks were mixed, with the region-wide Stoxx 600 up 0.05% in early Frankfurt trading, while Britain’s FTSE 100 was down 0.38% as the pound climbed to 1.2420 against the US dollar after hawkish comments on interest rates and inflation from Bank of America policymakers. England.
Overnight in Asia, the MSCI Japan Ex-Japan Index was up 0.16% in late trading while Japan’s Nikkei 225 was up 0.3%.
2. – Next week: Jobs data in focus as Fed bets on interest rate accelerate
Employment data will take center stage this week as markets look for clues to the Federal Reserve’s next move on interest rates when it meets in mid-June.
With investors now pricing in a nearly 60% chance of another rate hike from the Fed, thanks in part to data showing stubbornly high core inflation levels and a pickup in housing activity, this week’s assessments of labor market strength could Be critical to enhance current market expectations.
The Labor Department will release job vacancies data for April on Wednesday at 10:00 a.m. ET, with the ADP National Employment Report at 8:15 a.m. ET on Thursday.
The May Nonfarm Payrolls report is due at 8:30 AM ET Friday, with analysts looking for job growth slowing significantly from April, with 180,000 new jobs created and average monthly hourly earnings falling to 0.4%.
Only a handful of S&P 500 companies are scheduled to report this week as first-quarter earnings season draws to a close, with updates from Hewlett Packard Enterprise. (HPE) – Get a free reportAfter the Tuesday bell, Salesforce (CRM) – Get a free reportOn Wednesday, chip maker Broadcom (AVGO) – Get a free reportThursday.
3. – Nvidia approaches $1 trillion mark as AI Chipmaker extends its winnings
nvidia (NVDA) – Get a free reportThe shares extended gains in pre-market trading, bringing them close to the $1 trillion market capitalization level, after the chipmaker revealed plans to build a new artificial intelligence-powered supercomputer for the Israeli government.
CEO Jensen Huang also unveiled a host of new AI-related products at a computer fair in Taiwan. Including a new supercomputing platform, known as the DGX GH200, that can help tech companies build their own extended versions of ChatGPT from OpenAI.
The chip maker also unveiled plans to collaborate with Britain’s WPP, the world’s largest advertising company, and also unveiled a system known as ACE Games to enhance the level of background character designs in the various new releases.
Nvidia, which added nearly $185 billion in market value last week after blowing out first-quarter earnings forecasts, is up 3.7% in pre-market trading to indicate an opening bell price of $404.00 each.
4. – Tesla shares rise as Elon Musk falls in China
Tesla (TSLA) – Get a free reportShares rose in pre-market trading amid reports that CEO Elon Musk has arrived in China, on his first visit to the world’s largest auto market in three years, with plans to meet with a group of high-level officials in Beijing.
Reports indicate that Musk’s own plan backfired in the Chinese capital early Tuesday, with China’s foreign ministry issuing a statement saying the Tesla CEO, as well as other business leaders, would meet as part of an effort to promote “mutually beneficial cooperation.”
China remains a crucial component of Musk’s plans to boost Tesla’s total production to nearly two million vehicles annually, but increased competition and an uneven economic recovery from the country’s Covid-free health policies have dampened sales, pushed up costs and squeezed profit margins.
Tesla sales fell 14.7% in April, compared to the previous month, while overall industry sales rose 2.1%, according to data from the China Passenger Car Association.
Tesla shares are up 2.8% in pre-market trading to indicate an opening bell price of $198.58 per share.
5. – Disney
Walt Disney (dis) – Get a free reportShares rose in pre-market trade after the live-action media and entertainment group’s live-action remake of “The Little Mermaid” topped the North American box office over Memorial Day weekend.
Box Office Mojo reported that “The Little Mermaid,” which stars Halle Bailey as Ariel, grossed nearly $117.5 million in weekend ticket sales, the fifth-best Memorial Day tally ever, topping “Fast X” from Comcast-owned CMCSA Universal Studios. Disney and Marvel Studio’s “Guardians of the Galaxy: Vol. 3” came in third.
The film’s success provides Disney a much-needed respite from the headlines tying it in an ongoing feud with Florida Gov. Ron DeSantis, who launched his presidential campaign last week. Disney filed a federal lawsuit against DeSantis earlier this month, accusing him of unfairly targeting the company, scrapping plans to build a $1 billion corporate campus that would create about 2,000 new jobs.
Shares of Disney were ticked up 0.52% in pre-market trading to indicate an opening bell price of $88.75 per share.