US: Wall Street stocks down, US default fears

Tuesday’s session on Wall Street ended with declines in the main indices. The focus is on a possible US default due to a no-deal debt ceiling, as well as disappointing forecasts from retailer Home Depot.

The Dow Jones Industrial Average closed down 1.01%. and amounted to 33,012.14 points.

The S&P 500 ended the day down 0.64 percent. and amounted to 4,109.90 points.

The Nasdaq Composite lost 0.18 percent. and closed the session at 12,343.05 points.

Investors are worried about a possible US default. Democratic US President Joe Biden and Republican Speaker of the House Kevin McCarthy meet on Tuesday to try to make progress on a deal to raise the US government’s $31.4 trillion debt ceiling and avoid default.

“We all hope and expect that they will eventually come to an agreement because a US default would be extremely bad for risk markets and frankly for the economy as a whole,” Ben Powell, chief investment strategist at BlackRock Investment Institute, told TV Bloomberg.

The index of sentiment among American construction companies, prepared by the National Association of Home Builders (NAHB), rose to 50 points in May. vs. 45 pts. in last month. The market expected the index at 45 pts.

US industrial production rose 0.5% in April. mdm. 0.0% expected m/m, compared to +0.4 percent. a month earlier.

Manufacturing grew by 1%. mdm. +0.1% was forecast against -0.8%. a month earlier, adjusted from -0.5.

Utilization of the production capacity of American companies amounted to 79.7 percent. vs consensus 79.7 percent and against 79.4 percent. a month earlier, after adjustment from 79.8 percent.

US retail sales rose 0.4% in April. month to month. Analysts had expected sales to rise 0.8%.

Retail sales excluding auto sales rose 0.4%. mdm. An increase of 0.4% was expected.

A month earlier, U.S. retail sales fell 0.7 percent. in terms of m/m after the revision from -1 percent, and excluding car sales, it fell by 0.5 percent, after the revision from -0.8 percent.

Home Depot shares fell more than 2 percent. ahead of the session after the home improvement retailer released its latest quarterly figures and made disappointing assumptions for the future. The company decided to lower its full-year forecasts due to consumer reluctance to spend more on home furnishings.

Democratic US President Joe Biden and Republican Speaker of the House Kevin McCarthy will meet on Tuesday to try to make progress on a deal to raise the US government’s $31.4 trillion debt ceiling and avoid default.

“If you look at the timetable for the House and Senate bills, we’ve got to do something by this weekend, and we’re not even close,” McCarthy told reporters.

US Treasury Secretary Janet Yellen expressed concern about the lack of progress in the negotiations.

“Time is running out. Every day that Congress fails to act, we experience increased economic costs that could slow down the US economy. There is no time to waste,” US Treasury Secretary Janet Yellen said.

“Waiting until the last minute to suspend or increase your debt limit could seriously damage business and consumer confidence, raise the cost of short-term borrowing for taxpayers, and negatively impact the U.S. credit rating. In fact, we’ve already seen the cost of Treasury borrowing increase significantly for securities maturing in early June,” she added.

Michael Brown, a strategist at TraderX, said he believes a deal will eventually be reached, but the concessions the Democrats and President Joe Biden’s administration may have to make to close the deal could impose heavy costs on the US economy.

Investors are trying to anticipate further moves by the Federal Reserve.

“We believe the Fed will hold off on hikes for now as we see the transmission of monetary policy through the economy, but we still don’t believe the Fed will cut interest rates. at the end of the year, unless we have a major recession or inflation back to 2%, which is not our baseline scenario. Macro data is weakening but not falling sharply, so for now we still think there will be a slowdown, but we don’t see a recession as some expect,” said Fabiana Fedeli, M&G’s director of equity and multi-asset investment.

In oil, June WTI futures are trading at $70.59 a barrel, down 0.72%, while July Brent futures are down 0.77%. up to USD 74.65/b. (PAP Business)

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