Washington’s brinksmanship over the country’s debt ceiling continues for another day, even as Treasury Secretary Janet Yellen reiterated in a note Monday that the U.S. could default on its debt “as early as June 1.”
Still, there were signs that progress was being made. Yellen said, in an interview with The Wall Street Journal on Saturday, she’s hopeful and was “told [lawmakers] have found some areas of agreement.” President Joe Biden, likewise, expressed optimism that a deal with Republicans to raise or suspend the debt ceiling could be reached.
However, House Speaker Kevin McCarthy wasn’t as hopeful. He told NBC News that Democrats are not being serious about negotiations. “It doesn’t seem to me yet that they want a deal,” said McCarthy.
In short, the back-and-forth tussle remains. “It’s kind of a waiting game,” said Globalt Investments’ Keith Buchanan. “Each day that goes by, and each postponement, each day there’s not a development … I think it will grow more and more difficult for the markets to really get any traction.”
Indeed, even though major indexes all rose Monday, they made only minor moves. The S&P 500 added 0.3%, the Dow Jones Industrial Average gained 0.14% to snap a five-day losing streak and the Nasdaq Composite rose 0.66%.
We see the same pattern of positive moves on low trading volume in regional bank stocks. For instance, Zions Bancorp jumped 8.5% and Comerica climbed 7.3%, though their trading volume was below their 30-day average. That’s not necessarily a bad thing, of course — any gains in regional bank stocks will be welcome news, amid uncertainty in the sector.
One area that corporate America seems more certain of is inflation. Only 278 S&P 500 companies mentioned inflation in their first-quarter earnings calls, according to FactSet data. “This is the lowest number of S&P 500 companies citing ‘inflation’ on earnings calls going back to Q2 2021,” John Butters, vice president and senior earnings analyst at FactSet, wrote in a Monday note.
President Biden will meet congressional leaders today to continue talks about the debt ceiling. Investors are hoping U.S. lawmakers can quell that lingering fear.
