Debt Deal Agreed Upon But Jobs Report Looms

Congress will vote on the agreed upon debt deal this week and we also get important jobs data

Author

Mark Roussin
May 30, 2023

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Market Talk ⏪

Here is a look at 5 important topics from the week prior and/or related to the week ahead for investors to be mindful of:

  1. Debt Ceiling Agreement. For weeks now this has been our #1 topic to follow as we neared a June 1st deadline for an increase in the debt ceiling. Over the extended holiday weekend, Republican Leader McCarthy and President Biden hammered out a deal that was labeled a “compromise by both sides” according to the White House. However, both sides still have to pass the new agreement through Congress which as it stands right now, could be a battle in itself. Democrats and Republicans on both sides have expressed concerns regarding the agreement. If we do in fact get an agreement, the markets could jolt higher until we get to the Friday jobs report.

  2. May Jobs report looming. On Friday, investors will get fresh data regarding the health of the labor force as we get a reading on nonfarm payrolls which is expected to show a creation of 188,000 jobs according to estimates.

  3. The Fed may in fact hike again. Over the past few weeks economists and investors had started to agree on the fact, at least from a consensus standpoint, that the Fed may in fact pause on rate hikes during their next meeting in mid-June. However, the latest from the CME FedWatch Tool shows now that nearly 60% now believe the rate hike cycle will continue with yet another 25 basis point rate hike. This comes as the S&P 500 climbs higher, up nearly 10% so far in 2023 and inflation remains sticky.

  4. AI Craze continues on. The IYW ETF, which is the iShares US Technology ETF with many of the largest companies within AI being top positions in the fund. Top positions include: Apple, Microsoft, Alphabet, Meta Platforms, Nvidia, Broadcom, Salesforce, and Adobe. Those top positions account for 66% of the entire fund. IYW is up 20% over the past 12 months and up 40% YTD.

  5. Ford and Tesla teaming up. It was announced last week that Ford and Tesla came to an agreement allowing Ford EVs to charge at Tesla charging stations. This opens up more than 12,000 Tesla superchargers to Ford EV owners across both the US and Canada.

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US Markets 🇺🇸

Here is a performance summary for US Equities:

Here is a look at US Treasuries:

The Fear & Greed Index measures market sentiment based on the following seven factors: put/call ratios, junk bond demand, stock price breadth, market volatility, stock price strength, safe-haven demand, and market momentum.

The Fear and Greed Index was unchanged week to week as the index remains squarely in Greed, as the Nasdaq yet again had another strong week. Currently, the index has a reading of 67, which is in line with the prior week reading of 67.

Earnings on Deck 💰

This week is a short week but we still have some quarterly reports rolling in from some technology and cybersecurity companies this week. Here is a look at who's reporting this week:

Dividend News 📝

Here are some notable analyst upgrade/downgrades from the previous week:

  • Citi adds a negative catalyst watch on Nike

  • Citi upgrades Norfolk Southern and Union Pacific to buy from neutral

  • Wells Fargo upgrades Norfolk Southern to buy from neutral

  • HSBC upgrades Chevron to buy from hold

  • Jefferies upgrades Sherwin-Williams to buy from hold

  • Baird upgrades Nvidia to outperform from neutral (BIT OF A LATE UPGRADE)

  • Redburn downgrades American Express to sell from neutral

  • Morgan Stanley upgrades Rio Tinto to overweight from equal weight

  • Piper Sandler initiates CVS as overweight

  • Piper Sandler initiates UnitedHealth as overweight

Economic Data This Week 📆

Monday

  • MEMORIAL DAY (Markets CLOSED)

Tuesday

  • S&P/Case-Shiller Home Price Index

  • Consumer confidence

Wednesday

  • Fed Governor Michelle Bowman speaks

  • Chicago PMI (May)

  • JOLTS (April)

  • Fed Governor Philip Jefferson speaks

  • Philadelphia Fed President Patrick Harker speaks

Thursday

  • ADP private payrolls report (May)

  • Initial claims (week ending May 27)

  • S&P Global manufacturing PMI (May)

  • ISM Manufacturing (May)

  • Fed’s Harker speaks

Friday

  • U.S. jobs report (May)

Other Resources 📺

If you have not done so yet, check out my growing YouTube community where I publish weekly videos focused on building wealth through investing.

Here is a look at my latest video: 4 of the BEST Dividend Growth ETFs:

Another video I put out last week: 2 Dividend Stocks To Buy & Hold For The Next Decade:

Another video I put out last week: How Investing $100,000 in SCHD Can Be Life Changing:

Here are a few others of my latest videos:

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Have questions? You can email me directly at [email protected].

Happy Investing!

Mark

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