Stocks Closed Lower, Debt Ceiling Uncertainty Continues  Image: Bigstock Stocks closed lower yesterday on growing debt ceiling anxiety. In spite of comments from both sides that the talks are 'productive,' the latest reports still show both sides remain far apart. The X date (when the Treasury runs out of money), is estimated to be June 1, although some have put estimates at possibly June 7 or 8. Either way, the deadline is fast approaching, and the markets are going to want to see some progress soon. Also weighing on the markets could have been comments from Fed officials James Bullard (St. Louis Federal Reserve President), and Neel Kashkari (Minneapolis Federal Reserve President), who both believe that at least one more rate hike could be in order in the coming months. But as Mr. Bullard said, "exactly where those would be this year I don't know." Although, he does believe sooner would be better than later. Mr. Kashkari, apparently sensing the interest from others to pause, said he was not taking future rate hikes off the table, even if they decide to pause next month. The comments were made on Monday. But the market seemed to pay a little more attention to them on Tuesday.
In other news, Lowe's reported earnings before the open yesterday and posted a positive EPS surprise of 5.46%, and a positive sales surprise of 3.64%. But they lowered full-year EPS guidance to $13.20-$13.60 (midpoint of $13.40), vs. their earlier guidance of $13.60-$14.00 (midpoint of $13.80), for a decrease of -2.90%. But after HD did virtually the same thing last week, investors seemed to be prepared, and shares rose yesterday by 1.72%. Today we'll hear from investor favorites Nvidia and Splunk after the close. All in all, there's 137 companies on deck to report today. On the economic report front, we got the PMI Composite report yesterday, and it came in at 54.5 vs. last month's 53.4 and views for 50.0. The manufacturing index came in at 48.5, which was under the consensus for 50.0, while the services index came in at 55.1, which was above the consensus for 52.6. The Richmond Fed Manufacturing Index fell to -15 vs. last month's -10 and views for -8. And New Home Sales improved, coming in at 683,000 units (annualized) vs. last month's downwardly revised 656K, and estimates for 670K. Today we'll get MBA Mortgage Applications, the Survey of Business Uncertainty, and the State Street Investor Confidence Index. We'll also get the FOMC Minutes from the last Fed meeting from earlier this month. The overhead gaps still exist on the S&P (4,218.70), and on the Nasdaq (12,873.49). That's just 1.73% away for the S&P, and 2.43% away for the Nasdaq. Interestingly, there are also a few gaps underneath them as well with the nearest lower gap on the S&P at 4,082.61 (which is -1.52% away), while the nearest gap underneath the Nasdaq is at 12,033.15 (which is -4.20% away). The S&P also has two more gaps at 4,030.59, and 3,979.20. The Nasdaq has one more at 11,752.76. As the saying goes, 'all gaps are filled.' While that's not 100% true, plenty of gaps do get filled. The question is, which ones get filled first? The ones above the market or the ones below it? And then what happens next? In the meantime, stocks are doing well this year. And the seasonal and cyclical patterns are lining up favorably for the market. But uncertainty remains around the debt ceiling, inflation, and interest rates. Then again, the market is always worrying about something. See you tomorrow,  Kevin Matras
Executive Vice President, Zacks Investment Research | 
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