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Afternoon Note

Debt Ceiling Hiccup

By Charles Payne, CEO & Principal Analyst
5/19/2023 1:49 PM

The market meanders and the tension are so thick you could cut it with a knife. Investors face two big dark clouds: 1) Debt Ceiling Drama and 2) Federal Reserve going too far. 

Last week, it was easy to suggest that the debt ceiling was having minimal negative impact on markets, but this week’s more positive sentiment moved the needle, sending the S&P 500 and Nasdaq to the highest levels since late August. However, both indexes are lower today on a report that debt ceiling talks have paused amid a walkout by negotiators.

Fed Chief Powell reiterated at the conference that the Fed remains “strongly committed” to bringing inflation down to 2%. Powell emphasized that failure to do so would “prolong the pain” and hardship that American’s experience when there isn’t stability in prices. 

The Regional banking ETF (KRE) tumbled after reports that Treasury Secretary Yellen told bank CEOs that more mergers might be needed. Financials is one of the worst performers this afternoon.

The debt ceiling hiccup will have lasting consequences. Have a great weekend. 


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