“US Politicians Discuss Debt Ceiling and Stock Market Sentiment Sours”

The top US politicians are discussing on Tuesday evening the situation surrounding the debt ceiling in the US and a possible lifting. Sentiment in the stock markets soured towards closing time.

It was largely a decline that characterized Wall Street throughout the trading day on Tuesday, with the exception of the occasional weak rise for technology stocks and the Nasdaq index.

The mood, on the other hand, worsened recently towards closing time, which meant that all three tone-setting indices ended on the negative side. It was heaviest for the Dow Jones index, which includes 30 large American companies.

This is what it looks like at closing time:

• The collective index S&P 500 ended down 0.64 percent
• The technology index Nasdaq ended down 0.18 percent
• The Dow Jones ended down 1.01 percent

Oil prices have fallen somewhat since Wall Street opened. North Sea oil (burnt spot) trades for USD 74.5 a barrel around 22, down a scant dollar since midnight.

In Europe, there was a cautious decline on the most important stock exchanges on Tuesday. On Monday, the week started with a relatively cautious rise on Wall Street.

New debt ceiling talks

The situation surrounding the debt ceiling in the United States and the negotiations on raising the ceiling continue to receive a lot of attention.

President Joe Biden, Vice President Kamala Harris and leading politicians in Congress from both the Republican and Democratic parties went into meetings a little before closing time on Wall Street to discuss the issue further.

Republican Kevin McCarthy, the leader of the House of Representatives, met with the press shortly after 10 p.m. 22 Norwegian time following the talks.

There, McCarthy said that the parties are still far apart in the negotiations on the debt ceiling, but that it may be possible to get an agreement in place by the end of the week.

In a statement from the White House, the meeting is referred to as productive, while President Biden, according to the statement, emphasizes that there is still work to be done on a number of difficult topics.

The White House confirms also that Biden cut short a trip to Asia and the Pacific region because of the situation with the debt ceiling.

Treasury Secretary Janet Yellen warned again on Monday evening that action must be taken by the start of June, and potentially as early as June 1, to ensure that the US does not default on any of its obligations.

Chief strategist believes in procrastination

During the CNN program Early Start on Tuesday morning, chief policy strategist at AGF Investments, Greg Valliere, expressed little confidence that politicians will reach an agreement on the debt ceiling anytime soon.

– The chances of an agreement today are close to zero, said Valliere.

He emphasized that he believes that the parties will eventually reach an agreement, especially after statements were made at the weekend about progress in the negotiations.

– The question is when they get an agreement ready. I think it could take weeks and months. There almost needs to be a postponement through the summer, says Valliere.

– I hate to say it, but I think it has to get worse before it gets better. Worse in the markets, worse in the economy, there has to be an upheaval and we are not there yet.

Home Depot falls after data release

The home and building supply chain Home Depot is the first among several large American retail companies to present quarterly results this week.

The retail chain fell 2.15 percent on Wall Street, after delivering even weaker sales figures than expected and adjusting down its own expectations for 2023 as a whole.

Home Depot had a turnover of 37.3 billion dollars in the first quarter, it shows the quarterly report. Analysts had expected sales revenue of $38.3 billion. Comparable sales revenue fell 4.5 per cent compared to the first quarter last year.

The profit of 3.87 billion dollars was marginally higher than the analysts expected.

Lower timber prices and the weather in the first quarter, further weakening of demand compared to Home Depot’s expectations and continued uncertainty about consumer demand are the reasons given by CFO Richard McPhail for lowering expectations for 2023.

Home Depot now expects that sales revenue will fall by 2-5 percent this year compared to 2022, and a fall in profit of 7-13 percent.

Later this week, retail giants Target and Walmart will present their quarterly figures, respectively on Wednesday and Thursday.

Retail trade lower than expected

Before the stock market opened, general shopping figures for the US in April also came out.

Retail sales in the US rose 0.4 percent from March to April, while analysts had expected a stronger increase of 0.8 percent.

Industrial production, on the other hand, came in higher than expected. American industrial production was up 0.5 percent on a monthly basis in April, while analysts had expected an unchanged development.