Market Snapshot: U.S. stocks kick off week on cautious note as debt-ceiling talks continue

United States

U.S. stocks saw a mixed start to the week ahead of more government debt-ceiling talks later on Monday, though the S&P 500 and Nasdaq Composite managed to remain near 2023 highs.

Meanwhile, investors were weighing remarks by Federal Reserve officials about whether it would be appropriate to hold interest rates steady at the central bank’s June policy meeting.

How stocks are trading

  • The Dow Jones Industrial Average DJIA, -0.26% fell 106 points, or 0.3%, to 33,321.
  • The S&P 500 SPX, +0.17% was up slightly by 7 points, or almost 0.2%, at 4,199.
  • The Nasdaq Composite COMP, +0.61% gained 75 points, or 0.6%, to trade at 12,723.

Stocks had ended slightly lower on Friday as debt-ceiling talks hit a roadblock. However, they still scored solid weekly gains, with the Dow up 0.4%, the S&P 500 rising 1.7% and the Nasdaq Composite logging a 3% advance.

What’s driving markets

The week was starting out on a tentative note as traders continued to watch developments surrounding the U.S. government debt-ceiling battle.

President Joe Biden and House Speaker Kevin McCarthy were scheduled to meet at 5:30 p.m. Eastern time on Monday at the White House. The Treasury Department has warned that a failure to raise the debt limit could result in a federal default as early as June 1, or what’s known as the so-called X-date.

See: Debt-ceiling talks: As Biden and McCarthy plan to meet today, analysts say deal is needed by Friday

“The debt ceiling is at the forefront of the market’s thinking, given the proximity to the X- date,” said Jack McIntyre, a portfolio manager at Brandywine Global Investment Management in Philadelphia, which managed $ 55 billion as of March 31. “There are probably things that are nonnegotiable and negotiable in the negotiations, and, knowing how most of these things go, it will probably be the last second or minute that they reach a compromise because no one wants to be perceived as caving in.”

Via phone, McIntyre said that “we’re going to get some volatility around it before we reach some conclusion,” and Treasurys look more attractive than equities right now.

Some investors remain wary about the tech-driven nature of the rally, even while bulls welcome the S&P 500’s SPX, +0.17% move toward the top of its multimonth range near 4,200, a level which it briefly broke through on Monday and Friday.

Read: Megacap tech stocks out of control? Big Tech still has the power to extend the rally and weather an economic storm, analysts say.

To not have a broad group of stocks participating in a rally is “a bad sign for the duration of a bull market,” said Phil Toews, chief executive of Toews Corp. in New York, which manages $ 1.2 million in assets.

In addition, “we think that this sanguine attitude by investors about the debt-ceiling issue is a potential big mistake,” Toews said via phone. “The U.S. doesn’t have to default to create market chaos. With potentially nine days left before the X-date, we think the market is underreacting. People should watch the negotiations very carefully right now.”

There are no U.S. economic updates of note due Monday, but several Federal Reserve officials were scheduled to speak.

In a CNBC interview, Minneapolis Fed President Neel Kashkari said that “right now, it’s a close call between raising in June or skipping.”

“Important to me is not signaling that we’re done. If we were to skip in June, that does not mean that we are done with our tightening cycle,” said Kashkari, a voting member this year of the rate-setting Federal Open Market Committee.

Meanwhile, St. Louis Fed President James Bullard said on Monday that he would like to see two more quarter-of-a-percentage-point interest-rate hikes this year.

Companies in focus

  • China’s government told users of computer equipment deemed sensitive to stop buying products from the biggest U.S. memory-chip maker, Micron Technology Inc. MU, -2.77%. Shares fell 2.9%.
  • Shares of Meta Platforms Inc. META, +1.52% gained 1.9%, shaking off premarket weakness seen after the social-media giant was fined €1.2 billion ($ 1.3 billion) by Ireland’s Data Protection Commission over allegations it violated European Commission rules on data protection.
  • Chevron Corp. CVX, -1.00% announced an agreement on Monday to buy Colorado-based oil and gas producer PDC Energy Inc. PDCE, +8.15% in an all-stock deal valued at $ 6.3 billion, or $ 7.6 billion when including debt. PDC shares rose 8.6%, while Chevron’s stock fell 0.7%.
  • Shares of Greenhill & Co. Inc. GHL, +116.67% soared 117% after Japan-based Mizuho Financial Group 8411, -0.75% MFG, -0.85% announced an agreement to buy the independent investment bank in an all-cash deal valued at $ 550 million, including debt. 

— Jamie Chisholm contributed to this article.