THE GIST (“THE WHAT”)
The S&P 500 index closed a very choppy session mostly flat at 4138.12, up 1.87 points, consolidating near last Friday’s highs amid ongoing debt ceiling stalemate and ahead of key inflation reading on Wednesday. An early session rebound in the recently battered regional stocks after PacWest BanCorp announced a sharp cut in its dividend also faded mid-session with the KBW regional banking index falling 2.8%. Our AI-based trading models stayed out of market in today’s directionless choppy session.
Note: Our daily “S&P 500 Trading plan” will be posted around 9:30/10:00am EDT, every trading day.
For the Trading Plans published this morning, please click here
For the last published Results of the Morning Trading Plans, please click here
THE DETAILS (The “How & Why”):
Uncertainty around the looming debt ceiling capped market sentiment after Treasury Secretary Yellen Janet Yellen hinted that unless the debt ceiling cap is lifted, the Treasury department might run out of funds to pay its bills by June 1.
Markets also digested the Federal Reserve’s Senior Loan Officer Opinion Survey that reported a jump in tightening terms of medium and long-term loans from 44.8% in previous quarter to 46.8% in the recent quarter. The proportion of banks reporting stronger demand for industrial and commercial loans also fell to its lowest level since 2009, falling 55.6% in the last quarter.
Catalent Inc (-25.74%), Tyson Foods Inc. (-16.41%) and AES Corp (4.23%) were among the worst decliners following disappointing earnings. On the bullish side, energy stocks traded higher for the day alongside a 2% rally in oil prices.
Investors will now turn their attention to the key economic data release, including Consumer Price Index, Producer Price Index and weekly jobless claims readings this week to gauge whether the Fed’s ongoing tightening cycle are showing signs of stagflation in the economy.