The S&P 500 finished little changed on Monday as Wall Street awaited a pivotal debt ceiling meeting and government officials scrambled to avert a default.
The benchmark index inched 0.02% higher to finish at 4,192.63, while the Dow Jones Industrial Average lost 140.05 points, or 0.42%, to end at 33,286.58. The Nasdaq Composite gained 0.5% to settle at 12,720.78.
Monday's moves brought the tech-heavy index to its highest close and highest intraday level since August.
President Joe Biden and House Speaker Kevin McCarthy are set to meet Monday at 5:30 p.m. ET to continue debt ceiling talks, with just 10 days left before the earliest date that Treasury Secretary Janet Yellen said the U.S. could realistically default.
Veteran negotiators on both sides resumed talks Monday morning in the Capitol, but mandatory government spending cuts remain a major obstacle. Republicans insist on paring back spending to baseline 2022 levels, but Biden said that any cuts across the board without additional tax hikes are out of the question.
"Investors are starting to get concerned about what's happening with the debt ceiling talks, but on the other hand, the economy still is pretty strong, the job market's really strong," said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance.
Major averages are coming off a winning week. Led by technology stocks, equities continue grinding higher despite uncertainty in Washington and sticky inflation, with the S&P 500 hovering just below the 4,200 level.
While the technology trade may have further to run, some on Wall Street say stronger market breadth is needed for a rally to continue longer term.
"If the rest of the market doesn't participate, then there's an end to this," said Sylvia Jablonski, CEO at Defiance ETFs, adding that stronger market breadth could come after the Federal Reserve's June meeting.
Monday ushered in a relatively light week for economic data, with a second reading for first-quarter GDP slated for Thursday and the personal consumption expenditures gauge, the Fed's preferred inflation measure, due Friday.
The release of Fed minutes on Wednesday from the May meeting could shed light on how central bankers are thinking about the possibility of further rate hikes.
First-quarter earnings season is winding down, but notable reports loom from Zoom Video, Lowe's and Dick's Sporting Goods.
— CNBC's Christina Wilkie contributed reporting
The S&P 500 finished little changed on Monday, inching 0.02% higher to finish at 4,192.63.
The Dow Jones Industrial Average lost 140.05 points, or 0.42%, to end at 33,286.58. The Nasdaq Composite gained 0.5% to settle at 12,720.78. The tech-heavy index hit its highest close and intraday level since August.
— Samantha Subin
Goldman Sachs believes the current downturn in the energy sector has created attractive opportunities for investors.
The Energy Select Sector SPDR Fund (XLE) was down about 8% year-to-date through last Friday, according to FactSet. The energy sector is down 9.4% in 2023, the largest decline among the 11 major S&P 500 sectors. Meanwhile, the broad market index is up 9.4% in 2023.
To read more about which notable underperformers in the energy sector could see large gains, click here.
— Hakyung Kim
Amazon is now one of three stocks on Evercore ISI's internet and technology top picks.
The tech notched the third spot in a Sunday note. Analyst Mark Mahaney highlighted Amazon Web Services (AWS) as a catalyst for growth in the stock.
"Our view is that the 2nd derivative call on AWS is very likely to turn positive going into Q3, due in part to easing comps and in part to the later-innings stretch of the Cloud optimization cycle," Mahaney said.
CNBC Pro subscribers can read the full story here.
— Brian Evans
Equities continue climbing a "wall of worry" despite the recent rally higher in the market, according to Bank of America's Stephen Suttmeier.
"Sentiment, positioning and cash levels suggest underexposed investors who are braced for Armageddon," the technical research strategist said in a Monday note to clients. "If their greatest fears do not materialize or get pushed deeper into the future, this would increase the risk for catch-up rally phase."
Leveraged funds being "aggressively short" and money funds near record highs help support this viewpoint, Suttmeier said. He added that current conditions mimic wall of worry periods in recent history, including the 2012 eurozone debt crisis.
— Samantha Subin
The S&P 500′s breakout of its 3,800 to 4,200-point range last week may not signal a bull market ahead, Morgan Stanley warned.
"Bottom line, from a technical standpoint, last week's price action showed signs of panic buying, in our view," equity strategist Mike Wilson said in a note to clients Monday. "Rather than a short squeeze, the market was driven by the biggest winners as more market participants convinced themselves the next bull market may have begun and they can't afford to miss it."
"In short, we believe this rally will prove to be a head fake like last summer's," he added.
CNBC Pro subscribers can read the full story here.
— Alex Harring
The S&P 500 has bounced back after the banking crisis in March, and is higher by 9% this year, and 2% this quarter. But UBS does not expect that will last.
"[We] do not think the likelihood of tighter credit conditions and lower growth is adequately reflected in US equity market pricing today," UBS' Vincent Heaney wrote Monday.
The strategist advised investors to seek out high quality bonds, saying there is "better risk-reward' there. Equity investors are better off diversifying into emerging markets, including China, he added. He also prefers defensive stocks such as consumer staples and utilities.
— Sarah Min
Stocks were mixed as the final hour of trading kicked off.
The Dow Jones Industrial Average lost 60 points, or 0.18%, while the S&P 500 and Nasdaq Composite added about 0.3% and 0.7%, respectively.
— Samantha Subin
The S&P 500 weighted by market cap, or the amount of all of a stock's shares put together, is outperforming an equal-weighted version by the largest gap in more than two decades so far this year.
The cap-weighted version is about 8.2 percentage points higher than the equal-weighted one when comparing with the start of 2023. If that performance holds through year-end, it would be the largest outperformance from the cap-weighted version since 1999, according to data analyzed by Liz Ann Sonders, chief investment strategist at Charles Schwab.
The S&P 500 is already weighted by market cap, though some firms have ETFs and other ways to track how the index would perform is all stocks had the same weighting. This year, investors have pointed out the fact that much of the S&P 500's gains are tied to outperformance in mega-cap technology stocks that are some of the biggest members of the index.
So far this year, the index has gained more than 9%. But it briefly gave up those gains as investors sold off amid the banking crisis in March.
— Alex Harring
Wall Street firm Stephens is going against two bets from Warren Buffett's Berkshire Hathaway — American Express and Capital One.
"While we acknowledge it's tough to short a legend... we are getting more confident that these Cards' focus on new accounts makes them more susceptible in a recession," Stephens analysts said in a note. "Moreover, for Capital One our primary worry is on its auto business, which we think is under-reserved."
Berkshire built a new stake in Capital One in the first quarter, worth more than $950 million. It's unclear if it was Buffett who purchased the stock or one of his investing lieutenants, Todd Combs and Ted Weschler, was behind the move.
Berkshire has owned a big stake in American Express for over 10 years. The bet was the third largest holding for the conglomerate as of the end of March, worth about $25 billion.
— Yun Li
House Speaker Kevin McCarthy, R-Calif., says "decisions have to be made" at his meeting on the debt ceiling with President Joe Biden, scheduled to begin at 5:30 p.m. ET.
"We've got to have movement" on pieces of an eventual a deal to raise the debt ceiling, McCarthy told reporters in the Capitol, adding "I know where I think people should be able to get to."
With only 10 days left until the earliest date Treasury Secretary Janet Yellen says the U.S. will risk default, Biden and McCarthy are under intense pressure to reach a compromise agreement. If and when they do, it will still require at least a week to turn their handshake deal into legislation and pass it through the House and Senate.
The House is currently scheduled to leave for Memorial Day recess this weekend, but McCarthy said he would postpone it if needed, in order to hold a vote to raise the debt ceiling. "We're going to stay and do our job," he said.
— Christina Wilkie
Hedge funds snatched up shares of companies focused on artificial intelligence during the first quarter in a bid to capitalize on the latest trend overtaking Wall Street, recent securities filings show.
Some of the popular names scooped up by investors included heavyweight competitors Alphabet and Microsoft.
Read more on the top bets from major investors here.
— Samantha Subin
Morgan Stanley thinks financial conditions are still too loose to signal that potential market turmoil has waned.
"While we'd like to say the worst is behind us, it isn't," Morgan Stanley chief investment officer Lisa Shalett wrote on Monday.
She added that the dichotomy of a lower spend in the U.S. Treasury General Account and the Federal Reserve providing liquidity to placate the regional banking crisis could spell more pain for equities.
"Liquidity withdrawal lies ahead and will remove a major tailwind for equities," she said.
— Brian Evans
Cryptocurrencies were flat to start the week as movements in stocks and bond yields continued to push and pull on crypto prices.
Bitcoin was down 8.7% for May and on pace for its worst month since November, according to Coin Metrics. Ether was lower for the month by nearly 5% and heading for its worst month since December.
"Crypto continues to remain the best performing asset this year relative to gold, equities, bonds and DXY," said Bernstein analyst Gautam Chhugani said in a note Monday. "We continue to believe in our structural thesis on the 'new crypto cycle', but it is never a straight path up ... These dull markets, we believe, offer the best long-term risk rewards."
— Tanaya Macheel, Gina Francolla
Check out the companies making headlines in midday trading.
— Sarah Min
Nike stock could feel the ramifications of Foot Locker's weak quarterly results from Friday.
Foot Locker reported both an earnings and revenue miss, driven by excess inventory and a weaker consumer. The weak report could ultimately disproportionately hurt Nike compared to peers with merchandise in Foot Locker stores.
"While NKE has easy GM comparisons (following an estimated decline of 250bps in F23), we believe there is risk they will guide to GM expansion below consensus, which would be a negative for the stock when they report at the end of June (though we believe these concerns may pressure the stock near-term as well)," Citi analyst Paul Lejuez said in a Monday note.
Shares in the footwear giant lost 3% on Monday.
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— Brian Evans
Pfizer shares popped more than 4% on Monday after the JAMA Network published the results of a peer-reviewed study that showed danuglipron may be as effective for weight loss as Novo Nordisk's Ozempic.
The study tracked 411 adults with type 2 diabetes who took the oral GLP-1 medication, twice a day or a placebo. Those who took the drug, which is yet to be approved, lost an average of 10 pounds over 16 weeks, the study found. That compares very favorably with the results a phase three clinical trial of Ozempic at a 1 milligram dosage.
Demand has been so great for Novo's Ozempic and Wegovy that the company has experienced periodic shortages of both brands. Both contain semaglutide, but Wegovy contains a higher dosage and its indicated for weight loss. Ozempic is indicated for type 2 diabetes but has been used off-label by many to shed pounds.
Novo Nordisk also sells an oral GLP-1 drug, Rybelsus, as a type 2 diabetes treatment. In studies, it has not been shown to be as effective for weight loss as Ozempic and Wegovy, which are administered by a weekly injection.
Investors have been very excited about the blockbuster potential for these new weight loss treatments and it is thought that many with obesity would prefer an oral medication.
— Christina Cheddar Berk
Shares of American Airlines and JetBlue fell Monday after a federal judge on Friday ruled in favor of the Department of Justice, ordering the airlines to end their Northeast partnership.
The DOJ sued both companies in September 2021, alleging that their partnership effectively works as a merger and could increase prices for consumers.
JetBlue's stock lost 1.6% while American Airlines shares fell 2.4%.
— Leslie Josephs Samantha Subin
Shares of Micron Technology fell more than 3% amid news that China will restrict some sales of the memory chipmakers' products.
The country's Cyberspace Administration barred operators of "critical information infrastructure" from purchasing products from the company after Micron's products failed its network security review.
The firm poses a "major security risk" to China's critical information infrastructure supply chain and affects [its] national security," a statement said.
The news lifted Chinese chipmakers, including Hong Kong-listed Hua Hong Semiconductor and SMIC. Some chipmakers, including Qualcomm, Lam Research, Broadcom and Applied Materials were down nearly 1% each.
— Samantha Subin
President Joe Biden and House Speaker Kevin McCarthy will meet in the Oval Office at 5:30 p.m. ET to discuss the debt limit face to face, the White House announced.
The meeting comes after a dramatic few days during which tense negotiations between the White House and House Republicans were briefly suspended Friday when Republicans walked out.
Biden and McCarthy talked by phone on Sunday, and both leaders later described the call as "productive."
But with 10 days left before what Treasury Secretary Janet Yellen calls the government's "hard deadline" June 1 to raise the debt limit or face likely default, major hurdles remain.
Chief among them is baseline government spending cuts, which Republicans demand but which Biden says must be accompanied by tax increases. The GOP has said any tax hikes are a nonstarter.
"I think he's got to get away from the socialist wing of the Democratic Party and represent America," McCarthy said of the president Sunday. "That means both sides have to have compromise."
— Christina Wilkie
Japanese investment firm Mizuho announced on Monday that it is continuing its push into the United States with the acquisition of advisory firm Greenhill & Co.
The all-cash deal is priced at $15 per share, for an enterprise value of $550 million. That price is more than double Greenhill's closing price on Friday of $6.78 per share.
Following the completion of the deal, the Greenhill brand will remain intact and serve as the mergers and acquisitions and restructuring advisory business of Mizuho, according to a press release.
— Jesse Pound