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Stock Market News for May 17, 2023

U.S. stock markets closed lower on Tuesday following weak earnings results of a retail supergiant. Market participants remained concerned regarding the debt ceiling negotiations. Weak economic data also raised fear about a recession in the near-term. All three major stock indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) tumbled 1% or 336.46 points to close at 33,012.12. Notably, 26 components of the 30-stock index ended in negative territory, three in positive zone and one remained unchanged. The blue-chip index ended in red year-to-date for the first time since May 4.,

The Home Depot Inc. HD has reported dismal first-quarter fiscal 2023 results, with the top and bottom lines declining year over year. Quarterly earnings of $3.82 per share declined 6.6% from $4.09 registered in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate of $3.80.

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Net sales declined 4.2% to $37,257 million from $38,908 million in the year-ago quarter. The metric also missed the Zacks Consensus Estimate of $38,510 million. Driven by the impacts of lumber deflation and weather on first-quarter fiscal 2023 results, as well as expectations of softened consumer demand, Home Depot lowered its sales and earnings view for fiscal 2023.

The tech-heavy Nasdaq Composite finished at 12,343.05, dropping 0.2% due to weak performance of large-cap technology stocks. The biggest loser of the tech-laden index was Seagen Inc. SGEN declining 6%. Seagen carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The S&P 500 fell 0.6% to end at 4,109.90. 10 out of 11 broad sectors of the benchmark index closed in negative territory while 0ne ended in positive zone. The Energy Select Sector SPDR (XLE), the Utilities Select Sector SPDR (XLU) and the Real Estate Select Sector SPDR (XLRE) plummeted 2.5%, 2.25 and 2.7%, respectively.

The fear-gauge CBOE Volatility Index (VIX) was up 5.1% to 17.99. A total of 9.36 billion shares were traded on Tuesday, lower than the last 20-session average of 10.58 billion. Decliners outnumbered advancers on the NYSE by a 4.05-to-1 ratio. On Nasdaq, a 2.28-to-1 ratio favored declining issues.

Debt Ceiling Negotiations

President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy are set to initiate a crucial debt ceiling talk on Tuesday. Just two weeks left before the U.S. government could run short of money to pay its bills.
President Biden is very optimistic about reaching a Congressional agreement. “I really think there’s a desire on their part, as well as ours, to reach an agreement, and I think we’ll be able to do it,” Biden told reporters Sunday.

Last week, Treasury Secretary Janet Yellen warned that the government could fail to meet its obligations unless a Congressional agreement is reached by Jun 1. However, in an interview with the Wall Street Journal, she said “I’m hopeful. I think the negotiations are very active. I’m told they have found some areas of agreement.”

Economic Data

The Department of Commerce reported that retail sales rose 0.4% in April, lower-than the consensus estimate of 1.2%. The metric for March was revised upward from a decline of 1% to a drop of 0.7%. Core retail sales (excluding auto) increased 0.4% in April, lagging the consensus estimate of 0.6%.

Industrial production rose 0.5% in April, beating the consensus estimate of 0.1%. The metric for March was revised downward from a gain of 4% to a break-even. Capacity utilization in April was 79.7%, in line with the consensus estimate. The metric for March was revised downward to 79.4% from 79.8% reported earlier.

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