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Will They Raise the Debt Ceiling?

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Last Week’s Market Activity

As we seem to edge closer to Congress raising the debt ceiling, the stock market has also risen. Over the past week, the major US indices have been up between 0.7% to just over 3%, with large-cap tech stocks greatly outperforming the market. However, to end the week, we saw countless retailers down on Friday, with Foot Locker reporting a decline in sales and a greatly reduced outlook. This led FL to be down nearly 30% in just one trading day, and countless other retailers were down between 5% and 10%.

Macroeconomic Indicators

Last week, we didn’t see many major shifts in the macroeconomic landscape. As of right now, the market is largely being moved by speculation on whether or not United States Federal Government officials will raise the debt ceiling. In the past few weeks, many have believed that a resolution would not be reached. However, as the looming deadline gets closer, it seems that some form of agreement will be reached prior to the deadline. This, of course, has led to some volatility in the markets over the past couple of weeks.

Upcoming Market Catalysts

This week, we’ll get to see a bunch of important economic data, starting on Tuesday with new home sales. On Wednesday, we’ll get the May FOMC meeting minutes, which will be great indicators as to what the Fed will do with interest rates in June. On Thursday, we’ll get the second reading of Q1 GDP as well as pending home sales. Lastly, on Friday, we’ll see releases for nominal personal income and spending, PCE inflation, and consumer sentiment. While PCE likely won’t yield any surprises, it’s still important to pay attention to, as it’s the Fed’s preferred inflation reading.

Notable Earnings Releases

Earnings season continues this week, as we have some key retailers and tech companies reporting their earnings, such as:

05/22 – Ryanair Holdings (RYAAY), Zoom Video Communications (ZM)
05/23 – Intuit (INTU), Lowe’s Companies (LOW), Palo Alto Networks (PANW), AutoZone (AZO), Dick’s Sporting Goods (DKS), BJ’s Wholesale Club (BJ), V.F. Corporation (VFC)
Williams Sonoma (WSM), Toll Brothers (TOL)
05/24 – NVIDIA (NVDA), Snowflake (SNOW)
05/25 – Costco Wholesale (COST), Medtronic (MDT), Toronto Dominion Bank (TD), Autodesk (ADSK), Dollar Tree (DLTR), Ulta Beauty (ULTA), Best Buy (BBY)

This week we’ll get to hear from some more large retailers, like LOW, AZO, DKS, BJ, WSM, COST, DLTR, ULTA, and BBY. Given the broad range of sectors they cover, we’ll get a very good idea of how consumers are spending their money and, more importantly, where they are spending their money.

We’ll also hear from some mid-sized tech companies, like ZM, INTU, NVDA, and SNOW. While we aren’t likely to see any surprises, it will be interesting to hear what each company has to say about their given industry. This is especially true for INTU, as the IRS just announced it will be building a free online resource that will allegedly rival TurboTax.

Lastly, we’ll also hear from TOL. This will be a key earnings release to look out for, as they service the highest end of the luxury home market. Out of all the publicly traded developers, their average home sale price is the highest. This means their commentary will give us a good idea of how the ultra-wealthy are spending their money.

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