With only a small fraction of the S & P 500 left to report quarterly earnings, investors are now turning their focus to another major hurdle for the markets and economy: the debt ceiling crisis. Wall Street’s heightened focus on the debt ceiling comes after Treasury Secretary Janet Yellen on Monday warned the U.S. may exhaust its ability to meet its borrowing obligations as early as June 1 — at least a month in advance of predictions by many Wall Street economists. On Tuesday, Jim Cramer said “this gauntlet is too hard to get through without some real bumps.” What’s the hold up on raising the limit? House Republicans maintain that any increase to the debt limit should be tied to spending cuts, while President Joe Biden and the Democrats argue that paying the country’s bills should not be dictated by an agreement to reduce the country’s deficit. Hopefully, the two sides will come together and make a deal — or make some progress toward a resolution — this Tuesday when House Speaker Kevin McCarthy and Senate Minority Leader Mitch McConnell meet with Biden at the White House to discuss the issue. A failure to raise the debt ceiling before June 1 could lead to a downgrade of U.S. debt by credit rating agencies, higher borrowing costs, lower consumer and investor sentiment and a crash landing into recession. Though it’s largely expected that the ceiling will indeed be raised since the U.S. government defaulting on its debt is almost unthinkable, the high-stakes game of chicken being played in Washington has all investors on edge. Earlier this week, we looked back to debt limit crisis of 2011 for potential lessons. The protracted fight ultimately ended in an agreement in early August of that year, but it was a choppy summertime ride for investors. The S & P 500 declined about 17% over a stretch beginning in late July to mid-August, during which Standard & Poor’s took the unprecedented step of downgrading the United States’ AAA credit rating . On top of the debt ceiling, we also have the ongoing regional bank crisis to contend with, as fears rose again this week as PacWest announced that it was exploring strategic options , including the possibility of a sale. Aside from all this uncertainty, two key pieces of inflationary data are due next week: the consumer price index on Wednesday and the producer price index on Thursday. And of course, more earnings. About 85% of the S & P 500 has now reported quarterly earnings results and of those that have, 75% have reported better-than-expected revenue results while 79% have reported better-than-expected results for earnings per share, according to FactSet. Within the portfolio, Wynn Resorts will report Tuesday, after the closing bell, and Disney will report on Wednesday, after the closing bell. Here are some other earnings reports and economic numbers to watch in the week ahead: Monday, May 8 Before the bell: Tyson Foods (TSN), BioNTech SE (BNTX), Delek US Holdings (DK), DISH Network Corporation (DISH), Viatris (VTRS), TreeHouse Foods (THS), Alpha Metallurgical Resources, (AMR), KKR & Co. L.P. (KKR), Energizer Holdings, (ENR), GoHealth, (GOCO), Delek Logistics Partners LP (LPDKL), Six Flags (SIX) After the bell: McKesson Corp. (MCK), Suncor Energy, (SU), PayPal Holdings, (PYPL), Western Digital Corp. (WDC), Devon Energy Corp. (DVN), International Flavors & Fragrances, (IFF), AECOM (ACM), DaVita (DVA), Brighthouse Financial, (BHF), ARKO Corp. (ARKO), Pactiv Evergreen (PTVE), Kemper Corporation (KMPR), Skyworks Solutions, (SWKS), JELD-WEN Holding, (JELD), Crossamerica Partners LP (CAPL), Cabot Corporation (CBT), Ventas, (VTR), Hillenbrand, (HI), MRC Global (MRC), Palantir (PLTR) Tuesday, May 9 Before the bell: Duke Energy Corp. (DUK), Aramark Holdings Corp. (ARMK), Jacobs (J), Fox Corporation (FOXA), Henry Schein, (HSIC), Vistra Energy (VST), Air Products & Chemicals, (APD), GlobalFoundries (GFS), Veritiv Corporation (VRTV), Bright Health Group (BHG), LCI Industries (LCII), Warner Music Group Corp. (WMG), TransDigm Group (TDG), Under Armour, (UAA), Catalent, (CTLT), Southwest Gas Corp. (SWX), Tempur Sealy International, (TPX), Elanco Animal Health orporated (ELAN), Nexstar Media Group, (NXST), Coty (COTY), Perrigo Co. (PRGO), International Game Technology (IGT), Atkore International Group (ATKR), Sylvamo Corp (SLVM), Apollo Global Management, LLC (APO), ScanSource, (SCSC), Hawaiian Electric Industries, (HE), WeWork (WE), AdaptHealth Corp. (AHCO), Novavax, (NVAX), Waters Corp. (WAT), Clarivate Plc (CLVT), Kosmos Energy (KOS), Stagwell (STGW), Repros Therapeutics (RPRX), Steven Madden, (SHOO), Edgewell Personal Care Company (EPC), Toast (TOST) After the bell: Occidental Petroleum Corp. (OXY), Coupang, (CPNG), L oln National Corp. (LNC), Jackson Financial (JXN), Celanese Corp. (CE), A-Mark Precious Metals (AMRK), GXO Logistics, (GXO), H & R Block (HRB), Liberty Global (LBTYA), Electronic Arts (EA), Airbnb, (ABNB), Endeavor Group Holdings, (EDR), Compass, (COMP), Darling Ingredients (DAR), IAC/InterActiveCorp (IAC), Oscar Health, (OSCR), Vroom, (VRM), Akamai Technologies, (AKAM), Twilio, (TWLO), Clover Health Investments Corp. (CLOV), Grocery Outlet, (GO), Primoris Services Corporation (PRIM), Rackspace Technology, (RXT) Wednesday, May 10 Before the bell: Brookfield Asset Management (BAM), Performance Food Group Company (PFGC), Teva Pharmaceutical Industries, (TEVA), ODP Corporation (ODP), First Citizens BancShares (FCNCA), Li Auto (LIBMO), Syneos Health, (SYNH), Brink’s Company (BCO), Middleby Corp (MIDD), Advantage Solutions, (ADVB), Valvoline (VVV), Vishay Intertechnology, (VSH), Nomad Foods Limited (NOMD), UWM Holdings Corporation (UWMC), Reynolds Consumer Products (REYN), Wolverine World Wide (WWW), New York Times Co (NYT), Roblox Corporation (RBLX), Wendy’s International, (WEN), RumbleOn, (RMBL), Coherent (COHR), Taboola (TBLA) After the bell: Nutrien (NTR), Flex (FLEX), Manulife Financial Corp (MFC), STERIS Corp (STE), Amdocs, (DOX), Franchise Group, (FRG), Genpact Limited (G), Tetra Tech (TTEK), Jazz Pharmaceuticals (JAZZ), Crane Co. (CR), Cheesecake Factory (CAKE), AppLovin Corporation (APP), Crescent Energy (CRGY), Copa Holdings S.A. (CPA), Robinhood Markets, (HOOD), Pan American Silver Corp. (PAAS), Sonos, (SONO), Ritchie Bros. Auctioneers (RBAAMC), Corsair Gaming, (CRSR), Fluence Energy, (FLNC), Alta Equipment Group (ALTG), Intercorp Financial Services (IFSAMC), Unity (U), Trade Desk, (TTDAMC), Owl Rock Capital Corporation (ORCC), SunOpta (STKL), Traeger, (COOK) 8:30 a.m. ET: Consumer Price Index Thursday, May 11 Before the bell: JD.com, (JD), US Foods Holding Corp. (USFD), Tapestry, (TPR), Kelly Services (KELYA), PerkinElmer (PKI), Charles River Laboratories International, (CRL), Algonquin Power & Utilities Corp. (AQN), Entegris (ENTG), National Vision Holdings (EYE), NICE (NICE), Aveanna Healthcare Holdings, (AVAHBMO), Himax Technologies (HIMX), Carrols Restaurant Group (TAST), Krispy Kreme, (DNUT), PGT Innovations, (PGTI), Utz Brands, (UTZ), YETI Holdings, (YETI) After the bell: Sanmina (SANM), Sun Life Financial (SLF) 8:30 a.m. ET: Weekly Initial Jobless Claims 8:30 a.m. ET: Producer Price Index Friday, May 12 Before the bell: Spectrum Brands (SPB), AirSculpt Tech (AIRS) Looking back It was another big week of earnings for the Club, plus several key macroeconomic reports and a Federal Open Market Committee meeting. The market’s reaction to April jobs report on Friday was the most surprising. Job growth came in better than expected, the Labor Department reported, with nonfarm payrolls increasing 235,000 for the month, beating Wall Street’s estimates for growth of 180,000. The unemployment rate was 3.4% against an estimate of 3.6% and tied for the lowest level since 1969, while wage growth — a key barometer of inflation — increased 4.4% compared to the expected 4.2% gain. A few weeks ago, a nonfarm payroll this hot would a major cause for concern, as it would support a more hawkish Federal Reserve and additional interest rate hikes. Until recently, good news (strong job market, rising wages) has meant bad news (stocks falling in anticipation of more rate raises). However, on Friday, stocks rallied, with the Dow gaining 1.65%, the S & P 500 climbing 1.85% and the Nasdaq Composite increasing 2.25%. Why the shift to good news actually being good for stocks? It could be that recession fears are growing so loud that investors are happy with anything that reduces the potential of a hard economic landing — even at the cost of another rate hike and the understanding the Fed was correct in raising rates 25 basis points on Wednesday. On the other hand, it may be that the April report wasn’t actually as strong as it first seemed. Though the headline number came in 73,000 payrolls above expectations, the combined revisions for February and March showed the added jobs was lower than previously thought, by 149,000 jobs. Netting that out and one could argue that with the April release the economy is actually 76,000 jobs below expectations. Throw in the hotter wage inflation and unemployment numbers and Friday’s release may simply be viewed as a Goldilocks number for a market already looking to next week’s consumer price index report on Wednesday. The April ISM manufacturing report on Monday came in at 47.1%, ahead of the expected 46.7%. However, it still indicates a contraction in the manufacturing industry. Factory orders, reported Tuesday, increased 0.9% monthly in March, less than the estimated 1.2% gain. Moreover, February’s result was downwardly revised to indicate a 1.1% monthly decline, from a 0.7% decline previously reported. Also Tuesday: earnings results from Advanced Micro Devices (AMD), Ford (F) and Starbucks (SBUX), after the close. On Wednesday, the April ADP Employment report came in well ahead of expectations. Estee Lauder (EL) and Emerson Electric (EMR) reported earnings before the opening bell. Later Wednesday, the April ISM services report was 51.9%, a tick better than the 51.8% expected. The Federal Reserve announced an expected increase of 25 basis points to the federal funds rate. Bausch Health, Apple and Coterra Energy all reported quarterly results, while initial jobless claims for the week ended April 29 increased by 13,000 from the prior week to 242,000, slightly ahead of the 240,000 expected. As of Friday’s settle, the U.S. dollar index is trading a little above 101. Gold is trading at around $2,000 per ounce. WTI crude prices are hovering the low-$70s per barrel. The yield on the 10-year Treasury remains around 3.45%. (See here for a full list of the stocks in Jim Cramer’s Charitable Trust.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
U.S. President Joe Biden speaks with members of his “Investing in America Cabinet” in the Roosevelt Room at the White House in Washington, May 5, 2023.
Leah Millis | Reuters
With only a small fraction of the S&P 500 left to report quarterly earnings, investors are now turning their focus to another major hurdle for the markets and economy: the debt ceiling crisis.
