Fairness markets: “Lack of conviction” of the markets

House Speaker Kevin McCarthy, R-California, exits the Capitol en route to a meeting with President Biden to discuss the debt limit Tuesday, May 9, 2023.

Bill Clark | Cq-roll Call, Inc. | Getty Images

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Markets lacked conviction as the US debt ceiling debate remained impassioned in intensity.

What you need to know today

• US stocks fell – albeit slightly – on Friday on weak consumer sentiment data. European markets closed higher. France’s CAC 40 index rose 0.45% as Société Générale beat first-quarter earnings estimates, rising 1.2%.

• NBCUniversal advertising executive Linda Yaccarino will be Twitter’s next CEO, confirmed current CEO Elon Musk. Yaccarino “will primarily focus on business operations while I focus on product design and new technologies,” Musk tweeted.

• The presidential and parliamentary elections in Turkey ended on Sunday. According to Reuters, neither incumbent President Recep Tayyip Erdogan nor opposition rival Kemal Kilicdaroglu can clear the 50 percent hurdle for overall victory. If so, there would be a runoff in the May 28 presidential election.

• PROFESSIONAL Bitcoin lost 11.25% last week to hit a two-month low of $25,843. Analysts believe the cryptocurrency is poised for a price reversal as shown by the head and shoulders pattern – three spikes with a peak in the middle.

The final result

Markets lacked conviction as the debate over the US debt ceiling remained impassioned in intensity, to paraphrase Irish poet WB Yeats.

US stocks were little on Friday. The Dow Jones Industrial Average was flat, the S&P 500 slipped 0.16% and the Nasdaq Composite lost 0.35%. On a weekly basis, the Dow was down 1.1%, the S&P 500 was down 0.3% and the Nasdaq was up 0.4%.

It’s true that some stocks in the S&P defied the malaise, scaling new highs (and plunging to new lows). Pepsico, for example, hit $196.12 a share, its highest since 1965. Match Group — which owns dating platforms like Tinder, Match, and OkCupid — fell to $30.86 a share, its lowest since its IPO in November 2015.

But overall, “none of the sectors are making convincing moves in either direction, reflecting a general lack of conviction in the market,” said Joe Cusick, portfolio specialist and senior vice president at Calamos Investments.

Investors aside, US consumers are also losing confidence in the health of the economy. A preliminary reading from the University of Michigan consumer survey showed a lower-than-expected reading of 57.7 for May, compared with 63.5 in April and the lowest reading in six months.

Investors and consumers are hesitant, in part because of the possibility that the US might default on its debt. Over the past week we have heard stark warnings about the fallout from the US bankruptcy from JPMorgan Chase CEO Jamie Dimon, US Treasury Secretary Janet Yellen and even UK Treasury Secretary Jeremy Hunt. All reiterated the same point: If the US – the center of the global financial system – did not repay its national debt, economic anarchy would be unleashed across the world.

US President Joe Biden is set to meet with other lawmakers earlier this week – after a last-minute postponement – to continue talks on the debt ceiling. Investors, bankers and world leaders alike will soon learn whether the US can avert a new crisis.

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