US Open: Wall Street opens higher!

• Wall Street is set to open slightly higher today
• Debt-ceiling agreement is near
• Higher PCE data increase 25bp rate hike

On the last day of this week, Wall Street is set to open slightly higher despite sticky inflation data and the possibility of another rate hike in June. US500 futures points to 1.1% higher opening and US100 futures to 1.89% higher.

The debt ceiling topic is currently in focus as a potential deal is emerging to lift the limit and cap federal spending for two years. The Biden Administration and House Republicans are making progress towards an agreement that would involve some spending cuts and raising the ceiling. The deal could enable a House vote next week. This news has impacted the financial markets, leading to higher gold prices due to a weakened dollar and rising bond yields.

The April PCE data, combined with downward revisions to personal-income data, suggests that household balance sheets are deteriorating faster than previously believed. The PCE deflator, which measures inflation, rose 0.4% in April, surpassing expectations. The core PCE deflator also increased by 0.4%. Both figures accelerated from March, with year-over-year rises of 4.4% and 4.7% respectively. These higher-than-anticipated inflation readings, along with weakening personal-income data, increase the likelihood of another 25bp rate hike in June. Currently, according to the CME FED Watch Tool, the market assesses a 58% chance of the next rate hike.

New orders for durable goods, which include appliances, computers, cars, and other manufactured goods, rose by 1.1% in April compared to the previous month, reaching a seasonally adjusted value of $283 billion. This marks the second consecutive month of order growth, following a revised 3.3% increase in March. The results were contrary to economists' expectations, as they had forecasted a 0.8% decline in April. However, when excluding defense-related categories, new orders saw a decrease of 0.6%.

The US500 Index is currently trading at 4200 points and is experiencing a gain of nearly 1.1% today. The price has reached the upper resistance line at 4200 points, which coincides with the upper boundary of a bear market channel. This level is critical for the future price action. If the index breaks above this level, it could indicate a significant increase in play, especially if a debt ceiling agreement is reached. On the other hand, if the index fails to break above, the next support line can be found around 4160 points. Traders and investors should closely monitor the price movement at this crucial level to gain insights into the future direction of the US500 Index.

US500 Index, D1 timeframe, source: xStation 5

 

Company News:

• RingCentral Inc. (RNG.US) shares are up 3.7% after Needham upgraded the cloud-based business communications software company to buy from hold
• Gap (GPS.US) shares jump 11.6% after the apparel retailer produced better-than-expected earnings for the first quarter, compared to Wall Street forecasts for a sizable loss for the period
• Tilray Brands (TLRY.US) shares plunged 20.1% after the cannabis producer priced an offering of $150 million of unsecured convertible senior notes
• Ulta Beauty (ULTA.US) shares fall 11.6% after the beauty products retailer tempered its annual operating margin outlook, flagging increased inventory shrink related to theft at its stores

 

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.