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Debt limit talks, Biden's trip overseas, Walmart reports - what's moving markets

Published 05/18/2023, 05:30 AM
Updated 05/18/2023, 06:29 AM
© Reuters

Investing.com -- U.S. President Joe Biden climbs off a plane in Japan to discuss global issues at this weekend's G7 meeting, but the spotlight remains focused on the outcome of the debt ceiling talks in Washington. Meanwhile, Walmart prepares to report its quarterly results after its retail peers unveiled disappointing sales.

1. "We will not default"

President Biden sounded a cautiously bullish tone on the ongoing negotiations over raising the $31.4 trillion borrowing limit, saying that top-level members of Congress have agreed that the country "will not default."

Biden also confirmed that he would indeed trim his trip abroad this week to arrive back in Washington on Sunday to help hammer out a deal. House Speaker Kevin McCarthy, who has been at the forefront of the discussions as one of the key Republican leaders in Congress, told reporters that it is "doable" to forge an agreement by the time Biden returns this weekend.

For now, a formal resolution has yet to emerge, with both sides at odds over spending plans. Time is of the essence: Officials have estimated that the federal government could run out of money to pay its debts as soon as June 1.

U.S. stock futures edged slightly higher on Thursday as investors maintained guarded optimism for the outcome of the talks. At 04:49 ET (08:49 GMT), the Dow futures contract was up 25 points or 0.07%, S&P 500 futures traded 5 points or 0.14% higher, and Nasdaq 100 futures climbed 20 points or 0.15%.

2. Biden in Japan

Biden has arrived in Japan for a meeting with leaders from the Group of Seven leading democracies, with pressing global issues like the war in Ukraine and strained relations with China among the biggest topics on the table.

However, the debt ceiling negotiations back home will also likely still be a major focus at the gathering in Hiroshima, which is due to begin on Friday. Economists have warned that a U.S. default would not only impact the world's largest economy but have far-reaching consequences abroad.

A White House official told Reuters that Biden will hold a news conference on Sunday before he heads back to Washington.

3. Walmart to release earnings

Walmart (NYSE:WMT) is set to report its quarterly results on Thursday, rounding out a week of earnings that have provided a peek into the state of the retail industry and the health of the U.S. consumer.

The budget big-box chain faces a challenge to keep prices low even as inflationary pressures threaten to push up input costs, according to Investing.com's Damian Nowiszewski.

According to DataWeave statistics, which analyzed prices from early 2022 to February 2023, Walmart's average prices for a selected basket of nearly 600 products rose by just 3%. This would come in under both the average inflation rate and Walmart's closest competitors, Nowiszewski noted.

Rivals Target (NYSE:TGT) and Home Depot (NYSE:HD) have already posted their latest figures this week. Both firms unveiled sales that missed Wall Street estimates as high inflation convinced many shoppers to rein in non-essential spending.

4. Fresh U.S. jobs, housing data

Investors will have chance to parse through new data on Thursday that could give further definition to the outlook for both the U.S. labor and housing markets.

Weekly initial jobless claims are projected to edge down by 254,000 after they touched a year-and-a-half high of 264,000 in the week ended on May 6.

Meanwhile, existing home sales are expected to fall to a seasonally adjusted rate of 4.30 million in April, although elevated mortgage rates - a drag on homebuying activity in the prior month - are starting to show signs of easing.

The numbers may give clues into how the Federal Reserve's aggressive interest rate hiking campaign to corral inflation has impacted demand for labor and housing. The Fed raised borrowing costs by 25 basis points at its most recent policy meeting, but expectations remain that the U.S. central bank may push pause on its tightening cycle at its next gathering in June.

5. Oil inches lower amid debt ceiling discussions

Oil prices dipped on Thursday, paring back some of the previous session's gains, as traders eyed the potential outcome of the debt limit negotiations in Washington.

By 04:50 ET, U.S. crude futures traded 0.45% lower at $72.50 a barrel, while the Brent contract edged down by 0.49% to $76.58 per barrel.

Crude prices rallied over 3% on Wednesday on hopes that a deal to raise the U.S. debt limit could shortly be reached, adding to the news of a drop in U.S. gasoline inventories due to demand surging to its highest levels since 2021.

Latest comments

Biden is tge crises/ kick back - alleged president
I feel good that someone so old I wouldn’t let them drive me around the block in charge lol
When you finish drivers ed, you won't have to worry about it.
who is financially better off today than under Trump? thumbs up Trump and down for Biden and be honest.
mark nothing happens in a vacuum.. you should know by the one you have between your ears...
Biden = inflation machine
Haha 😂
brandon = Cornpops beach.
Biden = Jobs Machine
🤪😉😂🤣
Oh no! Emojis! What a retort.
job data not so good..Worried..
Next year budget won't be balanced. In 2024 the same people who haven't balanced the budget since 2001 will bring out the Constitution to argue we can't default.
brad, I know you have difficulties, but where did he say it was in the constitution? he is saying we will be at the debt ceiling again and it does state we can not default. just stop embarrassing yourself
To my dumb little friends. The Constitution cannot be used as a cudgel to fault lawmakers for not balancing a budget. There is no such requirement in it. Such lawmakers are not out of bounds, however, when they argue we cannot default on our debt. That is in the constitution. Now back to your pudding cups.
aw you guys are friends. maybe they'll share their pudding cups with you
Its the weakness of a democracy. people learn to vote themselves money. our hope falls on our republic. our representatives must step up and control the spending.
Gotta ban both parties from holding office again.
Debt ceiling talks continue with inflation and recession goes away.as the talks progress
I cant pay my mortgage, can i borrow more to pay it please?
Raising the debt ceiling develops a higher risk of US governments inability to repay its interest on loans. It will also result in US dollar collapse just like the Japanese Yen. If I were an american I will invest all my funds offshore.
Big institutions are doing that which is why Europe and Japan are seeing new highs, Japan is seeing 30 year highs. It like the Marco subs, the story isn't that the Marco subs are getting bigger but the drugs are getting so cheap to produce they need bigger subs to haul in bulk. Look at the Canadian pot stocks.
what goes up, keeps on going up!
Manufactured crisis so the MAGA sycophants can finish the job for their King.
No balanced budget since 2001. If the debt ceiling was abolished we would enter a death spiral.
 oh ya liken the last administration. Manufactured nonsense.
People keep on blaming this admin and then they plane that admin when the problem was in their bathroom mirror all the long.
let's go brandon
I wonder what's a bigger scandal now, Clinton's BJ or Trump's rape.
yeah.. rightwing r(etards) like to repeat themselves ad nauseam...
scandal was not the bj, it was he lied under oath. an actual crime not a 20 year old conspiracy
I wonder what will happen if we will default? Will stonks fall?
Bahahaa buy pesos.
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