As the White House and congressional leaders try to negotiate a compromise to avert a possible US government default, Wall Street has been kept on its toes. President Joe Biden is travelling to Asia, and a smaller team of negotiators is taking over; nevertheless, he has stated that he will cut short his trip this week.
The US economy would suffer catastrophic effects in the event of a default, which has been predicted to occur as soon as June, according to Treasury Secretary Janet Yellen and others.
Jamie Dimon, the CEO of JPMorgan Chase & Co., stated on Wednesday that the US government “probably” won’t default on its financial commitments. In a meeting with Senate Majority Leader Chuck Schumer to discuss the debt-ceiling impasse, Dimon attended among other top bank executives.
The 30-year Treasury bond’s yield barely moved. The yield on a 10-year bond increased to 3.57%, while the rate on a two-year bond increased to 4.15%. While gold prices declined to below $2,000, the dollar index rose.
While [House Speaker Kevin] McCarthy stated that an agreement may be reached by the end of this week, the timing may be by the end of the following week before Memorial Day, according to a note published on Wednesday by JPMorgan’s US market intelligence team.
Over the next few days, President Biden intends to keep in touch with McCarthy. The team claimed that any progress in the negotiations might have an effect on markets.
Given the early June X-date, the JPMorgan team continued, “With that in mind, markets may move in a tight range until an outcome is witnessed with the most negative risk coming if we enter Memorial Day weekend without a solution.
According to government data released on Wednesday, US home starts increased 2.2% in April to an annualised 1.4 million units. That is an annual decline of 22.3%. To reach its peak in 2023, single-family starts grew 1.6% month over month.
Building permits were issued in 1.41 million annualised units in April, a 1.5% decrease, and a 21.1% decrease year over year. Multi-family permits were issued at a 9.7% monthly decline.
Before the bell on Wednesday, retailers Target (TGT) and The TJX Companies, Inc. (TJX) released their quarterly earnings, which provided additional information on consumer health and a predictor of the likelihood of a recession.
Target (TGT) outperformed Wall Street’s profit forecasts but adopted a cautious stance towards consumers, appearing unwilling to spend money on discretionary items. The retailer lowered its expectations for the back-to-school shopping season by guiding second-quarter results below analyst predictions. Following the earnings results on Wednesday, shares increased by more than 2%.
The TJX Companies, which owns TJ Maxx, Marshalls, and Home Goods, reported better-than-expected first-quarter earnings but a pessimistic outlook. After the results on Wednesday, shares slightly increased.
After the electric vehicle manufacturer convened its annual shareholder meeting after the bell on Tuesday, shares of Tesla, Inc. (TSLA) increased more than 4% in single-stock moves. Elon Musk, the event’s CEO, declared that he had no plans to step down from his position and kept his board seat for another term.
Shares of cloud services provider Wix.com Ltd. (WIX) increased more than 1% on Wednesday after the company reported a net profit for the first quarter, helped by an increase in subscription income.
Shares of Advanced Micro Devices, Inc. (AMD) increased on Wednesday after Bernstein analyst Stacy Rasgon restated his Market-Perform ratings and $80 stock estimate for AMD in a note on Tuesday.