Barrage of News Keeps Market Stuck

The S&P 500 was flirting with new highs for the year yesterday on an intraday and closing basis but an afternoon retreat derailed that effort. Ultimately, the S&P 500 ended Monday’s session down a smidgen from where it closed on Friday.

Today’s trade isn’t setting up to produce much movement at the open. Currently, the S&P 500 futures are down eight points and are trading 0.2% below fair value, the Nasdaq 100 futures are down three points and are trading in-line with fair value, and the Dow Jones Industrial Average futures are down 87 points and are trading 0.2% below fair value.

The lack of conviction has to do in part with some “analysis paralysis” as there has been a barrage of news since yesterday’s close covering an assortment of topics that are unrelated in a direct way but which are all related in an indirect way for driving the market’s price action.

• A litany of earnings reports have been released, featuring better-than-expected results from Uber (UBER), Pfizer (PFE), and Lattice Semiconductor (LSCC), disappointing revenue guidance from Chegg (CHGG) that was blamed on the adverse impact of ChatGPT, and better-than-expected results from BP (BP) that were overshadowed by an acknowledgment that the company expects share buyback activity at the lower end of its $14-18 billion capital expenditure range.
• Treasury Secretary Yellen warned that the Treasury is unlikely to be able to continue to satisfy all of the government’s obligations by June, and potentially as early as June 1.
  • President Biden is due to meet House Speaker McCarthy and other Congressional leaders on May 9 to discuss the debt ceiling.
  • The 3-month T-bill yield is up 18 basis points to 5.19% while the 10-yr note yield is down two basis points to 3.54%.
• The Reserve Bank of Australia unexpectedly raised its cash rate by another 25 basis points to 3.85%.
• The Writers Guild of America, following six weeks of negotiations with Netflix, Amazon, Apple, Disney, Discovery-Warner, NBC Universal, Paramount and Sony, called a strike, effective Tuesday, May 2.
• April manufacturing PMI readings for the eurozone, Germany, France, Italy, Spain, and the UK were all below March levels; meanwhile, April core CPI for the eurozone improved to 5.6% yr/yr from 5.7% in March

In other developments, Bloomberg reports that Morgan Stanley (MS) is going to cut 3,000 jobs in the second quarter, mainly from its investment banking and trading units, and that IBM (IBM) is going to pause hiring for jobs that it thinks can be done with artificial intelligence.

There is more news coming, too.

The March Factory Orders (Briefing.com consensus 1.4%; prior -0.7%) and March JOLTS – Job Openings (prior 9.931 million) reports will be released at 10:00 a.m. ET.

This is one of those days where, figuratively, there is a lot for market participants to chew on, knowing at the same time there is an FOMC policy decision in the offing, that the debt ceiling angst has been ratcheted up with the latest guidance from Treasury Secretary Yellen, that U.S. economic activity is expected to cool, and that 4,200 continues to stand as a key technical barrier for the S&P 500.

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Originally Posted May 2, 2023 – Barrage of news keeps market stuck