Debt Ceiling Uncertainty Contributing To Choppy Trading On Wall Street

Stocks have shown a lack of direction over the course of the trading session on Monday, with the major averages bouncing back and forth across the unchanged line following the mixed performance seen last week.

Currently, the major averages are narrowly mixed. While the Dow is down 16.95 points or 0.1 percent at 33,283.67, the S&P 500 is up 0.46 points or less than a tenth of a percent at 4,124.54 and the Nasdaq is up 17.05 points or 0.1 percent at 12,301.79.

The choppy trading on Wall Street comes as traders are waiting for additional news regarding negotiations over raising the U.S. debt ceiling.

President Joe Biden is scheduled to meet with top congressional leaders about raising the debt ceiling on Tuesday after a meeting last Friday was postponed.

Biden expressed optimism about the talks in remarks to reporters over the weekend, although House Speaker Kevin McCarthy, R-Calif., told NBC News on Monday that the two sides are still “far apart.”

“It seems like they want to look like they’re in a meeting,” McCarthy said outside the Capitol. “They’re not talking anything serious.”

The lackluster performance also comes as traders look ahead to the release of some key economic data in the coming days.

Traders are likely to keep an eye on reports on retail sales, industrial production and housing starts, looking for additional clues about the outlook for the U.S. economy.

Remarks by Federal Reserve officials are also likely to attract attention this week, with Fed Chair Jerome Powell due to participate in a Perspectives on Monetary Policy panel before the Thomas Laubach Research Conference on Friday.

The New York Fed released a report this morning showing a substantial downturn in regional manufacturing activity in the month of May.

The report said the general business conditions index plunged to a negative 31.8 in May from a positive 10.8 in April, with a negative reading indicating a contraction. Economists had expected the index to drop to a negative 2.5.

Sector News

Most of the major sectors are showing only modest moves on the day, contributing to the lackluster performance by the broader markets.

Banking stocks have shown a strong move to the upside on the day, however, with the KBW Bank Index climbing by 1.6 percent.

Considerable strength is also visible among computer hardware stocks, as reflected by the 1.6 percent gain being posted by the NYSE Arca Computer Hardware Index.

Biotechnology, brokerage and oil service stocks are also seeing notable strength on the day, while utilities stocks have shown a significant move to the downside.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Monday. Japan’s Nikkei 225 Index advanced by 0.8 percent, while China’s Shanghai Composite Index jumped by 1.2 percent.

Meanwhile, the major European markets have turned mixed on the day. While the U.K.’s FTSE 100 Index is up by 0.2 percent, the French CAC 40 Index and the German DAX Index are both down by 0.1 percent.

In the bond market, treasuries are extending the pullback seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.9 basis points at 3.502 percent.

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