Five things you need to know before the market opens on Tuesday May 30:
1. -- Stock Futures Cautiously Higher On Debt Ceiling Deal
Wall Street futures bumped higher Tuesday, while the dollar rose to the highest levels in two months and Treasury yields eased, as markets reacted to news of a debt ceiling agreement that could avoid a U.S. default and limit government spending over the next two years.
The deal, brokered after weeks of talks between President Joe Biden and House Speaker Kevin McCarthy, would cap U.S. spending at current levels for the 2024 fiscal year, with only a 1% increase for 2025, while increasing military spending by 3% and trimmed billions in planned investment into the Internal Revenue Service.
“The agreement prevents the worst possible crisis, a default, for the first time in our nation’s history,” Biden told reporters at the White House late Sunday. “It takes the threat of a catastrophic default off the table.”
With Congressional rules dictating lawmakers need at least 72 hours to read and analyze any particular bill, the earliest the House is expected to vote on the proposals will be Wednesday, with the Senate following shortly after.
Passage isn't assured, however, with lawmakers on both sides of the aisle expressing disappointment with reported terms of the agreement, including moderate Democratic Congressman Jim Himes of Connecticut and Republican Matt Rosendale of Montana.
Still, investors were cautiously optimistic that the deal could find enough support to pass, with traders marking 1-month Treasury bills around 20 basis points lower in overnight deal at 5.805% while pushing the dollar index, which tracks the greenback against a basket of six global currencies, to a two-month high of 104.283.
Benchmark 2-year Treasury note yields eased to 4.514% while 10-year notes fell to 3.725%, although traders will be watching closely for indications of new supply as the Treasury looks to replenish its reserves with around $1 trillion in new bill, note and bonds sales over the coming months.
Oil prices, meanwhile, slumped noticeably lower in overnight trading, even in the wake of last week's warning from the Saudi oil ministry against speculators betting against crude prices, with WTI futures for July delivery falling $1.62 to $71.34 per barrel.
Heading into the start of the trading day on Wall Street, futures tied to the S&P 500 were indicating a 24 point opening bell gain while those linked to the Dow Jones Industrial Average were priced for an 85 point move to the upside. The tech-focused Nasdaq was looking at a 163 point advance thanks in part to pre-market gains for chipmakers such as Nvidia, Advanced Micro Devices and Intel.
European stocks were mixed, with the region-wide Stoxx 600 rising 0.05% in early Frankfurt trading while Britain's FTSE 100 slipped 0.38% as the pound rose to 1.2420 against the U.S. dollar following hawkish comments on interest rates and inflation from Bank of England policymakers.
Overnight in Asia, the region-wide MSCI ex-Japan index was marked 0.16% higher into the close of trading while Japan's Nikkei 225 gained 0.3%.
2. -- Week Ahead: Jobs Data In Focus As Fed Rate Bets Accelerate
Employment data will take center stage this week as markets looks for clues as to the Federal Reserve's next move on interest rates when it meets in mid June.
With investors now pricing in a near-60% chance of yet another rate hike from the Fed, thanks in part to data showing stubbornly high core inflation levels and a pick-up in housing activity, this week's assessments on the strength of the job market could prove crucial to cementing the current market forecasts.
The Labor Department will publish job openings data for the month of April on Wednesday at 10:00 am eastern time, with ADP's national employment report following at 8:15 am eastern time on Thursday.
Friday's non-farm payroll report for the month of May is slated for 8:30 am eastern time on Friday, with analysts looking for job growth to slow notable from April, with 180,000 new positions created and monthly average hourly earnings easing to 0.4%.
Only a handful of S&P 500 companies are scheduled to report this week as the first quarter earnings season winds to a close, with updates from Hewlett Packard Enterprise (HPE) after the bell Tuesday, Salesforce (CRM) on Wednesday and chipmaker Broadcom (AVGO) on Thursday.
3. -- Nvidia Nears $1 Trillion Mark As AI Chipmaker Extends Gains
Nvidia (NVDA) shares extended gains in pre-market trading, taking them close to the $1 trillion market cap level, after the chipmaker unveiled plans to build a new AI-powered super computer for the Israeli government.
CEO Jensen Huang also unveiled a host of new AI-related products at a computer show in Taiwan. including a new super computing platform, known as DGX GH200, which can helped tech companies create their own, scaled-up versions of OpenAI's ChatGPT.
The chipmaker also unveiled plans to team-up with Britain's WPP, the world's largest advertising company, and also unveiled a system known as ACE Games to boost the level of background character designs in various new releases.
Nvidia, which added nearly $185 billion in market value last week after blasting first quarter earnings forecasts, was marked 3.7% higher in pre-market trading to indicate an opening bell price of $404.00 each.
4. -- Tesla Shares Move Higher As Elon Musk Touches-Down in China
Tesla (TSLA) shares moved higher in pre-market trading amid reports that CEO Elon Musk has landed in China, marking his first visit to the world's largest car market in three years, with plans to meet with a host of high-level officials in Beijing.
Reports suggest Musk's private plan touched down in the Chinese capital early Tuesday, with the country's Foreign Ministry issuing a statement saying the Tesla CEO, as well as other business leaders, would meet as part of an effort to promote "mutually beneficial cooperation."
China remains a critical component to Musk's plans to boost overall Tesla production closer to 2 million vehicles a year, but increased competition and an uneven economic recovery from the country's zero-Covid health policies have blunted sales, lifted costs and narrowed profit margins.
Tesla sales fell 14.7% in April, compared to the previous month, while overall industry sales were up 2.1%, according to data from the China Passenger Car Association.
Tesla shares were marked 2.8% higher in pre-market trading to indicate an opening bell price of $198.58 each .
5. -- Disney
Walt Disney (DIS) shares nudged higher in pre-market trading after the media and entertainment group's live-action remake of "The Little Mermaid" topped north American box offices over the Memorial Day weekend.
Box Office Mojo reported that "The Little Mermaid", which stars Halle Bailey as the lead character Ariel, raked in around $117.5 million in weekend ticket sales, the fifth-best Memorial Day weekend haul on record, topping "Fast X" from Comcast-owned CMCSA Universal Studios. Disney and Marvel Studio's "Guardians of the Galaxy: Vol. 3" finished third.
The film's success offers Disney a much-needed respite from headlines linking it to an ongoing dispute with Florida Governor Ron DeSantis, who launched his Presidential campaign last week. Disney filed a federal lawsuit against DeSantis earlier this month, accusing him of unfairly targeting the company, and canceled plans to built a $1 billion corporate campus that would created around 2,000 new jobs.
Disney shares were marked 0..52% higher in pre-market trading to indicate an opening bell price of $88.75 each.
