5 things to know before the stock market opens Thursday
A trader work on the floor of the New York Stock Exchange (NYSE) in New York City, May 24, 2023. Brendan McDermid | Reuters
Here are the most important news items that investors need to start their trading day:
1. Plodding along
Stocks are coming off a rough day. All three major indices took a dive Wednesday after debt ceiling negotiations yet again yielded no deal. We could be in for a jumbled Thursday, however, after both Fitch's warning about the U.S. debt rating and Nvidia's blowout earnings report (more on both below). Investors will also chew over a new slate of retail earnings, including Best Buy and Dollar Tree, as well as pending home sales data and weekly jobless claims. Follow live market updates.
2. One week to get it done
U.S. House Speaker Kevin McCarthy (R-CA) speaks with reporters at the U.S. Capitol in Washington, U.S. May 24, 2023. Jonathan Ernst | Reuters
The Treasury Department has warned the U.S. could run out of money to pay its bills as soon as June 1, which is exactly one week from Thursday. So, what's the status of negotiations between the White House and House Speaker Kevin McCarthy's team? Improving, but still not where they need to be. The House, in fact, will be allowed to go home for Memorial Day weekend, although they're on call to come back for a vote. Meanwhile, the possibility of an unprecedented default on U.S. debt is ratcheting up the external pressure on Congress to raise the debt ceiling. Fitch put the U.S.'s triple-A status on rating watch negative, citing the tense debt talks.
3. Blowout report from Nvidia
Nvidia headquarters seen in Santa Clara, California, Feb. 22, 2023. Justin Sullivan | Getty Images News | Getty Images
Nvidia shares soared after the chip maker posted a big earnings beat and offered sales guidance way above Wall Street's estimates. The stock was already up 109% this year going into the earnings report after the bell Wednesday. The company is riding an artificial intelligence-driven wave of demand for chips. Its data center business posted a 14% increase in quarterly revenue. As CNBC's Kif Leswing points out, this robust result shows how important AI chips are becoming for cloud vendors and other companies running a lot of servers.
4. Ups and downs at the mall
Customers ride an escalator at The Galleria shopping mall after it opened during the coronavirus disease (COVID-19) outbreak in Houston Texas, May 1, 2020. Adrees Latif | Reuters
It's a tale of two mall retailers. American Eagle Outfitters ' shares plunged 19% in off-hours trading after the company said Wednesday afternoon it lowered its outlook for revenue and operating income for the year, citing a slowdown in sales heading into the current quarter. American Eagle also had a tough act to follow. Before the bell Wednesday, rival Abercrombie & Fitch posted a surprise profit and raised its guidance for the year. That, in turn, sparked a monster rally in the stock. Shares surged 31%, accounting for nearly all of Abercrombie's gains this year.
5. Awkward ...
Florida Gov. Ron DeSantis speaks during the annual Feenstra Family Picnic at the Dean Family Classic Car Museum in Sioux Center, Iowa, May 13, 2023. Rebecca S. Gratz | The Washington Post | Getty Images
Source: CNBC
