US President Joe Biden meets with House Speaker Kevin McCarthy (R-CA) in the Oval Office of the White House in Washington, D.C., May 22, 2023.
Drew Angerer | Getty Images News | Getty Images
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The only thing that can be said about yesterday’s market action is, well, it didn’t. The market is still in reactive mode, not a sustained uptrend.
The Only Story Made From Yesterday’s Market Actions It was, well, nothing. In other words, as I argued yesterday, the market is still in reactive mode, not a sustained uptrend.
In fact, all three major indexes fell on Tuesday. The S&P 500 dropped 1.12%, the Dow Jones Industrial Average dropped 0.69% and the Nasdaq Composite dropped 1.26%.
Investors were probably horrified by the lack of an update on the debt ceiling from Washington, even as President Joe Biden and House Speaker Kevin McCarthy described Monday’s meeting as “productive.” I guess.
And even if a deal is reached, analysts warn of more pain ahead. Bill Mertz, head of capital markets research at US Bank Wealth Management, said reserves in U.S. Treasury accounts are dwindling, prompting the Treasury to issue large amounts of bonds to bring accounts back to healthy levels. said I need to. “The impact is likely to be a loss of liquidity from the broader capital markets,” Mertz continued. In other words, the stock price may fall even after the deal is completed.
Nonetheless, there was some good news amidst the overall market downturn yesterday.
Shares of vaccine makers soared following the news. New wave of novel coronavirus disease (Covid-19) in China. BioNTech was up 8.2%, Pfizer was up 2.3% and Moderna was up 8.7%. However, investors should be aware that this movement is not caused by intrinsic changes inside the company, but by external factors, i.e. temporary factors. Waves of coronavirus come and go. Vaccine stocks will go up and down accordingly.
Pacwest jumped 7.7% on Monday and jumped another 4% in after-hours trading after a US regional bank announced it would sell real estate loans to improve its balance sheet. PacWest helped bail out other regional banks including KeyCorp, Comerica and Zions Bancorp, giving investors hope that the sector’s problems will soon be over.
But even concerns about local banks are overshadowed by outstanding debt ceilings. The market cannot move until this sword of Damocles is gone. And even when that’s over, there may still be issues left to work on.
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