This strategist warns that the debt ceiling is a buy but sell news event

Stock markets may have been awakened from hibernation thanks to debt ceiling hopes, which led to a rally on Wednesday on Wall Street, which propelled the S&P 500.


outside the milling business.

As investors await more developments in the capital, major retailer Wal-Mart reported on Thursday, while Federal Reserve Chairman Jerome Powell’s appearance looms on Friday.

As for Wednesday’s action, some highlight the bullish bets that depend on the White House and lawmakers getting a deal (read more about 0DTE – zero days to trade expiration options – here):

But investors may need to be resourceful if they are to ride any rally on debt ceiling hopes, we say. call today From Cameron Dawson, Chief Investment Officer at NewEdge Wealth, a boutique wealth manager. She urges investors to play debt ceiling optimism carefully.

“I think the debt ceiling is the biggest buying and selling news event, because the run up to the debt ceiling was actually a major driver of liquidity injections into this market,” she told CNBC. in an interview late Wednesday.

“When the Treasury spends its cash balance instead of issuing new bonds, the end result is that it increases the reserves in the system and adds liquidity and that is one of the reasons for the growth in stocks, technology stocks and speculative stocks of the year,” said the former Bank of America equity analyst.

“But when we get past the debt ceiling, the Treasury will start issuing new bonds and that will have the net effect of taking liquidity out of that market,” Dawson said, removing a tailwind for equities.

Debt ceiling discussion: How would US government debt and equities perform if a solution is found, says DataTrek

Her company has been cautious about stocks, and it’s not changing hands there, though that means sticking to quality names, rather than hiding in cash, she says. “We’ve remained investors, but we’re saying we don’t think names with high leverage or poor cash generation are where we want to be in this environment.”

“So in a tight liquidity environment, in an uncertain environment, you want to stay in those high-quality names in portfolios in order to get through the cycle,” said Dawson.

Our last word goes to one bullish vote predicting a higher move for the stock at the start of the week.

In his weekly newsletter published Monday, Kobessi Letter Editor-in-Chief Adam Kobessi put a bullish technical setup for the S&P 500 that could call into question the May sell-off theories.

“Basically, equity markets have been incredibly resilient despite a slew of headwinds and we think that will remain the case through June,” he wrote.

Kobeissi called 4,150 as near-term resistance on the upside — the S&P 500 closed at 4,158.77 on Wednesday — but said 4,200 is the “real long-term pivot point that the bulls need to break through.”

The last time the S&P 500 traded above 4200 was in August 2022 and the 4200 level has been rejected several times since then. It is likely that the near-term consolidation that we have seen is building technical energy for the breakout,” he said, adding that they remain optimistic that 4,200 will be reached.

is reading: The ‘doomsday machine’: This is what would happen if the debt ceiling was breached


US stocks




Mostly struggling to follow Wednesday’s rally, with some losses notably after fresh Fed comments. Oil prices


fell, along with gold futures


It continues to slide at $1,974.30 an ounce. The yield on the 10-year Treasury note


It rose by 5 basis points, at 3.62%. Asia stocks

JP: Nik

Wall Street followed a rally on Wednesday with strong gains of their own.

is reading: The Japanese stock market is in tatters. Is it too late to jump?

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Wal-Mart stock


They were higher after the retailer beat expectations and raised its earnings forecast for the full year, while Bath & Body Works


The stock rises on earnings exceeding expectations and increasing guidance. Ali Baba


Inventory fell after the Chinese e-commerce giant posted mixed results. Ross Stores


and applied materials


Due after market close.

is reading: Study says CEOs and other top executives save billions with ‘top hat’ retirement plans

Of the after-hours earnings news, Cisco shares


Down 3% on fears of falling orders – Chief Financial Officer Scott Herren told MarketWatch that clients are acting “cautious”. Take two arrows


It rose 10% after an outlook hinted that the next “Grand Theft Auto” video game was a year or so away. Barn boot retailer

long shoes

Shares fell 15% amid poor sales.



He says the ad-supported tier has approximately 5 million monthly active users globally.

Weekly jobless claims fell by 22,000 reversing the previous week’s rally, while the Philly Fed Factory Index showed a ninth consecutive decline in activity. Existing Home Sales, Key Economic Indicators Still Shown at 10 a.m. Dallas Fed President Lori Logan said the data does not justify a pause in rate hikes just yet. Federal Reserve Governor Philip Jefferson was scheduled to be in at 9:15 a.m., and Fed Vice Chairman for Oversight Michael Barr was due on Capitol Hill at 9:30 a.m.

Montana became the first state to ban TikTok, which calls the new law unconstitutional.

Florida Governor Ron DeSantis reportedly plans to officially launch his presidential campaign next week.

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– at extremes not seen since 2011. If the index pushes through significant resistance levels, they say these bets could roll back and cause a massive short covering rally.


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