The U.S. stock market seems poised to move higher at the opening bell today, as a new week on Wall Street begins. Overseas, the markets in Europe have been pressing ahead, while closer to home, the S&P 500 futures have been edging up in early morning trading. This week, investors will be watching the nation’s debt ceiling debate, as politicians scramble for a solution in front of a looming deadline. More recently, there has been some suggestion that progress is being made on this key issue. In addition, acquisition activity seems to be picking up, which could help boost investor sentiment.
In economic news, today should be relatively uneventful. Tomorrow, the retail sales figures for the month of April will be published. It remains to be seen if concerns about the health of the economy will continue to weigh on the consumer. Notably, rising prices and higher interest rates have led to increased borrowing costs for most shoppers. This is worrisome, especially as consumer debt levels have been increasing lately. In addition, this week the housing market will move into the spotlight. On Wednesday, housing starts and building permits for the month of April will be released. Existing homes sales follow on Thursday. Here, too, the rising interest-rate environment has pushed up mortgage rates, which makes it harder for individuals to purchase homes. Recent stress in the regional banking industry may also put pressure on the mortgage marketplace.
In the corporate arena, the first-quarter earnings season has largely concluded. Needless to say, the results were quite soft, even if numerous companies did manage to exceed lowered expectations. Looking ahead, many leading retail corporations are slated to weigh in with their results. This week, we will hear from Home Depot (HD), Target (TGT), and Walmart (WMT). These reports should provide investors with much-needed information about the broader retail sector. Generally, if the largest companies in a group are struggling, the smaller ones will probably not perform much better.
From a technical perspective, the S&P 500 Index has been locked in a sideways trading range for the past several weeks. Furthermore, market breadth has been quite thin, which is of concern. Specifically, a handful of stocks have been hitting new high ground, while many other issues have been under pressure. From a sector view point, the technology and consumer stocks have been making progress, while the energy and financial issues have been struggling to keep pace. Clearly, broader participation would provide support for the market and lift investor sentiment.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
CLICK HERE for more information on our services or call 1-800-VALUELINE (1-800-825-8354). Our account managers are available Monday through Friday, 8:00 AM to 6:00 PM Eastern Time.
