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Stocks Rally as Debt Ceiling Resolution Hopes Rise

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Data last week showed a bigger-than-expected drop in U.S. consumer sentiment, while comments by Federal Reserve officials added to uncertainty over whether the central bank will pause interest rate hikes in June. Earlier this month the Fed indicated it may pause further rate hikes as it assesses the impact of its past tightening, as well as the effect of recent bank sector stress on lending and credit.

The Commerce Department reported retail sales rose 0.4% in April, short of the estimate for an increase of 0.8%, which points to a softer consumer spending. However, core retail sales rebounded, a figure excluding automobiles, gasoline, building materials and food services.

Following a string of aggressive rate hikes by the Federal Reserve to fight stubbornly high inflation has slowed the U.S. economy according to recent data. That slowing has focused attention on when the central bank will pause hiking or cut interest rates. While the market is currently pricing in a rate cut by the end of the year, especially if economic conditions weaken enough to tip the U.S. into a recession, recent comments from Fed officials suggested they are not ready to cut rates soon.

According to the FedWatch tool 58% of the futures traders expect the Federal Reserve to pause its interest rate hikes when it meets in June, as officials assess how well their actions to date have done to cool inflation. Although inflation has been decelerating in recent months the tight labour market might complicate the Fed’s decision.

The Labor Department data showed Thursday that initial unemployment claims fell to 242,000. The print was below expectations and lower than the prior week, in sign of labour-market resilience. Investors are wary that still-tight labour market data could complicate the Fed’s calculations.

According to the National Association of Realtors existing home sales fell 3.4% in April amid supply shortage and high prices. The reading was lower from the prior month and well above expectations. On an annual basis, existing home sales are down 23.2% in comparison to April 2022.

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Source: Tradingview, S&P 500 Index Yearly Chart

Another factor in focus is the debt ceiling, which Congress must raise or suspend in the next couple of weeks for the U.S. to avoid the possibility of default. Equity markets rebounded on Wednesday on optimism about a debt ceiling deal in Washington. House Speaker Kevin McCarthy said on Thursday that he is optimistic congressional negotiators could reach a deal in time for a House vote next week.

Thursday’s price action breached its previous multiple resistance of 4,195 suggesting that the benchmark index could extend gains to the critical 4,325 level. The rising U.S. Treasury yields and U.S. dollar have not appeared to weigh on the index, however, could cap the short-term upside from here.

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Violeta Todorova

Senior Research

Violeta è entrata a far parte di Leverage Shares nel settembre 2022. È responsabile dello svolgimento di analisi tecniche e ricerche macroeconomiche ed azionarie, fornendo pregiate informazioni per aiutare a definire le strategie di investimento per i clienti.

Prima di cominciare con LS, Violeta ha lavorato presso diverse società di investimento di alto profilo in Australia, come Tollhurst e Morgans Financial, dove ha trascorso gli ultimi 12 anni della sua carriera.

Violeta è un tecnico di mercato certificato dall’Australian Technical Analysts Association e ha conseguito un diploma post-laurea in finanza applicata e investimenti presso Kaplan Professional (FINSIA), Australia, dove è stata docente per diversi anni.

Julian Manoilov

Marketing Lead

Julian è entrato a far parte di Leverage Shares nel 2018 come parte della prima espansione della società in Europa orientale. È responsabile della progettazione di strategie di marketing e della promozione della notorietà del marchio.

Oktay Kavrak

Head of Communications and Strategy

Oktay è entrato a far parte di Leverage Shares alla fine del 2019. È responsabile della crescita aziendale, mantenendo relazioni chiave e sviluppando attività di vendita nei mercati di lingua inglese.

È entrato in LS da UniCredit, dove è stato responsabile delle relazioni aziendali per le multinazionali. La sua precedente esperienza è in finanza aziendale e amministrazione di fondi in società come IBM Bulgaria e DeGiro / FundShare.

Oktay ha conseguito una laurea in Finanza e contabilità ed un certificato post-laurea in Imprenditoria presso il Babson College. Ha ottenuto anche la certificazione CFA.

Sandeep Rao

Research
Sandeep è entrato a far parte di Leverage Shares nel settembre 2020. È responsabile della ricerca sulle linee di prodotto esistenti e nuove, su asset class e strategie, con particolare riguardo all’analisi degli eventi attuali ed i loro sviluppi. Sandeep ha una lunga esperienza nei mercati finanziari. Iniziata in un hedge fund di Chicago come ingegnere finanziario, la sua carriera è proseguita in numerose società ed organizzazioni, nel corso di 8 anni – da Barclays (Capital’s Prime Services Division) al più recente Index Research Team di Nasdaq. Sandeep detiene un M.S. in Finanza ed un MBA all’Illinois Institute of Technology di Chicago.

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