US Stocks Fall As Investors Await Debt Ceiling Developments

  • US stocks experience losses as investors await developments on the debt ceiling standoff.
  • Talks on the government debt limit continue, but a deal to avert a US default has not been reached yet.
  • FOMC minutes are eagerly anticipated for further insights into the Federal Reserve’s next move, as recent comments from officials reduce expectations of a rate cut this year.
  • Kohl’s shares surge nearly 15% after reporting a surprise profit and maintaining full-year profit forecasts.
  • Abercrombie & Fitch beats earnings estimates, while Nvidia’s earnings report is awaited.
  • The dollar index stabilizes around 103.5, near two-month highs, as investors closely monitor the debt ceiling negotiations.
  • Little progress is seen in recent talks between President Biden and House Speaker McCarthy, as the risk of default estimated in early June looms.
  • Hawkish remarks from Federal Reserve officials support expectations of higher interest rates for a longer period.
  • Market pricing suggests a pause in the rate hike cycle next month, while reducing bets on interest rate cuts this year.
  • Investors look forward to the release of minutes from the Federal Reserve’s May meeting.

The E-mini S&P 500 has experienced a decline for the second consecutive day, driven by a higher level of volatility and a median-term perspective which favored selling calculations. Currently, the market is targeting the lower value extreme of the quarter, where core buyers may be waiting, depending on the outcome of the ongoing debt ceiling talks. Investors are also eagerly anticipating the release of the FOMC meeting minutes, which will provide insights into the future policy path.

In terms of market strategy, there is a possibility of targeting the swing lows of the previous balanced price range for absorption purposes, as larger positions may adjust their risk in that area. Additionally, sellers might find a secondary target around the Year’s developing VWAP (Volume-Weighted Average Price) on the daily interval.

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