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Market Snapshot: U.S. stocks kick off week on cautious note as debt-ceiling talks continue

U.S. stocks saw a mixed start to the week Monday, trading near 2023 highs as government debt-ceiling wrangling continues.

Investors also were weighing remarks by Federal Reserve officials around whether it would be appropriate to hold interest rates steady at the central bank’s June policy meeting.

How stocks are trading

  • The Dow Jones Industrial Average DJIA, -0.18% fell 74 points, or 0.2%, to 33,352.
  • The S&P 500 SPX, +0.15% was up 5 points, or 0.1%, at 4,197.
  • The Nasdaq Composite COMP, +0.43% gained 61 points, or 0.5%, to trade at 12,718.

Stocks ended slightly lower Friday as debt-ceiling talks hit a roadblock but still scored solid weekly gains, with the Dow up 0.4%, the S&P 500 rising 1.7% and the Nasdaq Composite logging a 3% advance.

What’s driving markets

The week was starting out on a tentative note as traders continue to watch developments surrounding the U.S. government debt-ceiling battle.

President Joe Biden and House Speaker Kevin McCarthy were scheduled to meet late Monday afternoon at the White House. The Treasury Department has warned that failure to raise the debt limit could result in a federal default as early as June 1.

“While a last-minute deal remains our expectation, the current large gap between the demands from both sides mean that investors should brace for more volatility in markets in the lead-up to an eventual compromise,” said Mark Haefele, chief investment officer at UBS Global Wealth Management, in a Monday note.

A deal would likely provide near-term support to equities, though

the risk-reward balance “looks more attractive for bonds relative to equities, with a bias toward quality,” he wrote.

Some investors remain wary about the tech-driven nature of the rally, even while bulls welcome the S&P 500’s SPX, +0.15% move to the top of — and on Friday, briefly through — its multimonth range at 4,200.

“With the seven largest stocks driving 85% of year-to-date gains, the top 10 names again account for roughly 35% of the [S&P 500] index by market cap. Historically, such concentration has not been a healthy development,” said Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, in a Monday note.

Read: Megacap tech stocks out of control? Big Tech still has the power to extend the rally and weather an economic storm, analysts say.

There are no U.S. economic updates of note due Monday, but several Federal Reserve officials were scheduled to speak.

Minneapolis Fed President Neel Kashkari, in a CNBC interview, said that “right now, it’s a close call between raising in June or skipping.” Kashkari is a voting member this year of the rate-setting Federal Open Market Committee. “Important to me is not signaling that we’re done. If we were to skip in June, that does not mean that we are done with our tightening cycle,” he said.

Meanwhile, St. Louis Fed President James Bullard on Monday said he would like to see two more quarter-percentage-point interest-rate hikes this year.

Companies in focus

  • China’s government on Sunday told users of computer equipment deemed sensitive to stop buying products from the biggest U.S. memory chip maker, Micron Technology Inc. MU, -2.66%. Shares fell 3.2%.
  • Shares of Meta Platforms Inc. META, +1.86% gained 2%, shaking off premarket weakness seen after the social-media giant was fined €1.2 billion ($1.3 billion) by Ireland’s Data Protection Commission over allegations it violated European Commission rules on data protection.
  • Chevron Corp. CVX, -0.52% announced Monday an agreement to buy Colorado-based oil and gas producer PDC Energy Inc. PDCE, +8.83% in an all-stock deal valued at $6.3 billion, or $7.6 billion when including debt. PDC shares surged 8.2%, while Chevron’s stock fell 1%.
  • Shares of Greenhill & Co. Inc. GHL, +116.81% soared 116% after Japan-based Mizuho Financial Group  8411, -0.75% announced an agreement to buy the independent investment bank in an all-cash deal valued at $550 million, including debt. 

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