JUNE 1, 2023
Stock futures were expected to react to news of House passage of a debt ceiling deal. – Courtney Crow, AP
U.S. stocks didn’t get much of a boost early Thursday after the U.S. House of Representatives approved a debt ceiling deal the night before that would avert global financial turmoil and an all but certain recession.
The S&P 500 index was up about 5 points, or 0.13% while the Dow Jones industrial average slid 115 points, or 0.35%, shortly after 10 a.m. Investors already appeared to shift their focus to mixed retail earnings and a tepid outlook from Salesforce.
Traders took the positive debt ceiling news in stride in part because stocks never fell in the lead-up to the vote based on expectations that Congress ultimately would reach an agreement to avoid default, says Jason Ware, chief investment officer of Albion Financial Group. Also, he says, the legislation still awaits passage by the U.S. Senate in the coming days.
“Stocks have been resilient all throughout this episode of D.C. brinkmanship,” Ware says. “Investors have essentially said, ‘We’ve seen this movie before,’ and thus there’s no ground to recover as we get to the other side of this hazard.”
Rather, he says investors can return to fretting over a more familiar set of woes — inflation, Fed interest rate hikes and the risk of a recession.
“Now back to our regularly scheduled program,” Ware says.
The S&P index closed Wednesday at 4,180, up 9.3% so far this year.
In Asia, stock indices were mostly higher overnight after the debt deal, although enthusiasm was muted by worries about the Chinese economy.
Japan’s benchmark Nikkei 225 rose 0.3% in morning trading to 30,976.43. Australia’s S&P/ASX 200 gained 0.3% to 7,109.40. South Korea’s Kospi quickly lost early gains to dip 0.4% to 2,567.86. Hong Kong’s Hang Seng jumped 0.8% to 18,381.63, while the Shanghai Composite added 0.4% to 3,216.86.
Major stock indices in Europe also rose after the U.S. debt limit news, with Germany’s DAX up 1% and London’s FTSE gaining 0.3%. A report showing lower-than-expected inflation in the euro zone also bolstered stocks.
If the debt deal lso passes in the Senate, government checks will continue to go out to Social Security recipients, veterans and others and would prevent financial upheaval at home and abroad, ahead of the Monday deadline when the Treasury has said the U.S. would run out of money to pay its debts.
Courtesy/Source: AP
