THE GIST (“THE WHAT”)
Logging its best week since March, the S&P 500 index closed the session slightly lower at 4191.99, down 6.07 points (-0.41%). Opening higher, then index pulled back amid reports that the debt ceiling talks seemed stalled once again. Dovish comments by Fed Chair Powell late afternoon, however, helped cap the day’s losses.
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Markets Celebrating the Obvious?! – Traders’ A.I. (tradersai.com)
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THE DETAILS (The “How & Why”):
Impasse over the debt ceiling talks fizzled an early morning rally following reports that the Republican negotiators had abruptly walked out of talks. The index, however, closed the week with modest gains amid hopes that a deal would be inevitable in order to avoid a default that could be catastrophic for the economy.
Dovish comments by Powell pushed the 10-year yield lower in the afternoon session to settle at 3.69% after hitting a high of 3.72%. While inflation still remains a concern, he hinted that tighter credit conditions following the recent banking sector turmoil could weigh on the economic growth. Markets are now broadly pricing a rate hike pause.
On the earnings front, Footlocker plunged 27% after the athletic retailer cut its full year sales forecast. Ulta Beauty fell 4.39% after Oppenheimer cut its price target on the beauty store. Chip stocks also were led lower by a 2.39% decline in Applied Materials Inc despite beating estimates after the semiconductor equipment maker giant posted weaker guidance for the third quarter due to declining memory chips demand.
On the bright side, Catalent Inc soared 15.65% after trading sharply lower before the market open after the drug maker announced that it is making progress in reducing costs that had accelerated during the pandemic era expansion. Globant SA was another strong gainer of the session, up more than 10% on beating revenue estimates.