Stock Market News for May 18, 2023

·3 min read

U.S. stock markets closed sharply higher on Wednesday following positive development on debt ceiling negotiations. Strong earnings results by retail behemoths also boosted market participants’ confidence on risky assets like equities. All three major stock indexes ended in positive territory and posted biggest single-day percentage gains since May 5.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) jumped 1.2% or 408.63 points to close at 33,420.77. Notably, 22 components of the 30-stock index ended in positive territory, eight in negative zone. The blue-chip index has re-entered in green year-to-date.

The tech-heavy Nasdaq Composite finished at 12,500.57, climbing 1.3% or 157.51 points due to strong performance of large-cap technology stocks. The tech-laden index has registered its highest closing since Aug 25, 2022.

The S&P 500 advanced 1.2% to end at 4,158.77. Nine out of 11 broad sectors of the benchmark index closed in positive territory while two ended in negative zone. The Consumer Discretionary Select Sector SPDR (XLY, the Financials Select Sector SPDR (XLF) and the Industrials Select Sector SPDR (XLI) advanced 2.1%, 2% and 1.7%, respectively.

The fear-gauge CBOE Volatility Index (VIX) was down 6.2% to 16.87. A total of 10.35 billion shares were traded on Wednesday, lower than the last 20-session average of 10.59 billion. Advancers outnumbered decliners on the NYSE by a 2.95-to-1 ratio. On Nasdaq, a 2.45-to-1 ratio favored advancing issues.

Debt Ceiling Negotiations

Wall Street reacted positively following positive developments over a potential Congressional deal on $31.4 trillion Federal debt. House Speaker Kevin McCarthy said that it’s “possible to get a deal by the end of the week.” He told to CNBC that “I think at the end of the day we do not have a debt default.”

President Joe Biden has decided to curtail its tour in Asia where he plans to attend the Group of Seven summit. He will return to Washington before the day scheduled to speed up the debt ceiling negotiation process.

Strong Retail Earnings

Target Corp. TGT came up with first-quarter fiscal 2023 results. Adjusted earnings of $2.05 per share, surpassed the Zacks Consensus Estimate of $1.74. However, the bottom line declined from the earnings of $2.19 reported in the year-ago period.

The big-box retailer generated total revenues of $25,322 million, which increased 0.6% year over year. However, the metric fell short of the Zacks Consensus Estimate of $25,338.2 million.

The TJX Companies Inc. TJX posted first-quarter fiscal 2024 results. EPS came in at $0.76, which soared roughly 55% from the year-ago period’s earnings of $0.49The bottom line cruised past the Zacks Consensus Estimate of $0.71.

Net sales came in at $11,783 million, up nearly 3% from the $11,406 million reported in the year-ago quarter. However, the metric fell short of the Zacks Consensus Estimate of $11,823 million.

Shares of Target and The TJX Companies gained 2.6% and 0.9%, respectively. The TJX Companies currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Economic Data

Housing Starts came in at 1.401 million units in April, marginally below the consensus estimate of 1.408 million units. The metric for March was revised downward to 1.371 million units from 1.42 million units.

Building Permits came in at 1.416 million units in April, marginally below the consensus estimate of 1.435 million units. The metric for March was revised upward to 1.437 million units from 1.413 million units.

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