Weekly Market Commentary
Tension Around the Debt Ceiling
Posted on May 29, 2023
Market Commentary by Mitchell Wood, Larson COO
|The Major Markets saw another mixed week of performance. Both the Nasdaq and the S&P 500 managed to climb higher with the Dow Jones and the two major MSCI indices trading lower.|
This disparity was even more visible at the sector level. Of the 11 sectors, only three managed to close higher, with the most significant returns in the Information Technology sector followed distantly by the Communication Services and Consumer Discretionary segments.
For the overall S&P 500, the index traded in a fairly substantial range with the low of the week trading just off the 4100 level midweek, before returning to the open and eventual high of the week at the 4,200 level.
The mixed performance was reflective of the tension felt around the Debt Ceiling talks ahead of the long holiday weekend.
|While most Americans were relaxing with the unofficial start of summer, President Joe Biden and House Speaker Kevin McCarthy were working out a tentative deal to extend the debt ceiling.|
The deal would extend the funding of the government until January 1st of 2025. With the use of additional “Extraordinary Measures”, this would effectively push the political conversation past the 2024 election cycle. Now, these two party leaders will have to get their parties on board.
|Meanwhile, various Fed Presidents have been out discussing whether or not the Fed will have one more rate hike at the upcoming June Meeting. This was further called into question with Friday’s release of the April Consumer Spending report which came in significantly hotter than expected.|
As a result, the CME Group now shows the greater probability for an additional 25-basis point increase at the June 13th and 14th meeting.
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|The S&P 500® Index is a capitalization index of 500 stock-designed to measure performance of the broad domestic economy through changes in the aggregate market value of stock representing all major industries. https://us.spindices.com/indices/equity/sp-500|
The Dow Jones Industrial Average® (The Dow®), is a price-weighted measure of 30 U.S. blue-chip companies. The index covers all industries except transportation and utilities. https://us.spindices.com/indices/equity/dow-jones-industrial-average
The NASDAQ Composite Index measures all NASDAQ domestic and international based common type stocks listed on The NASDAQ Stock Market. Today the NASDAQ Composite includes over 2,500 companies, more than most other stock market indexes. Because it is so broad-based, the Composite is one of the most widely followed and quoted major market indexes. https://indexes.nasdaqomx.com/Index/Overview/COMP
The MSCI World Index, which is part of The Modern Index Strategy, is a broad global equity benchmark that represents large and mid-cap equity performance across 23 developed markets countries. It covers approximately 85% of the free float-adjusted market capitalization in each country and MSCI World benchmark does not offer exposure to emerging markets.
The MSCI Emerging Markets (EM) Index is designed to represent the performance of large- and mid-cap securities in 24 Emerging Markets countries of the Americas, Europe, the Middle East, Africa and Asia. As of December 2017, it had more than 830 constituents and covered approximately 85% of the free float-adjusted market capitalization in each country. https://www.msci.com/
The S&P GSCI Crude Oil index provides investors with a reliable and publicly available benchmark for investment performance in the crude oil market. https://us.spindices.com/indices
Companies in the S&P 500 Sector Indices are classified based on the Global Industry Classification Standard (GICS®). https://us.spindices.com/indices