S&P 500 Closes Higher as Debt Ceiling Negotiations in Washington Are Set to Resume: Live Updates

The S&P 500 rose slightly to start the week Monday as traders assessed ongoing debt ceiling negotiations.

The broader index added 0.3% to 4,136.28. Meanwhile, the Dow Jones Industrial Average snapped a five-day losing streak, gaining 47.98 points, or 0.14%, to 33,348.60. The tech-heavy Nasdaq Composite outperformed, rising 0.66% to 12,365.21.

In focus for investors were debt ceiling talks, which were postponed to this week from Friday. President Joe Biden is expected to host top congressional leaders on Tuesday.

"It's kind of a waiting game," said Globalt Investments' Keith Buchanan. "Each day that goes by, and each postponement, each day there's not a development … I think it will grow more and more difficult for the markets to really get any traction." 

Treasury Secretary Janet Yellen told CNBC last week that failure to hatch an agreement on the debt ceiling would "produce financial chaos," with the Treasury currently giving June 1 as the date when it could fail to meet its obligations.

However, Yellen further hinted over the weekend that the U.S. would avoid a default.

"I'm hopeful. I think the negotiations are very active. I'm told they have found some areas of agreement," said Yellen in an interview with The Wall Street Journal on Saturday from Japan during a meeting of G-7 finance ministers.

On Monday, investors digested the May data for Empire State Manufacturing survey, which showed a collapse in manufacturing activity in New York. The survey fell about 43 points from April to a reading of -31.8, below the Dow Jones estimate of -5.

Elsewhere, corporate earnings season is drawing to a close, but some major retail reports this week will give investors further insight into the state of the consumer. Home Depot reports Tuesday. Target and Walmart are set to report Wednesday and Thursday, respectively.

Lea la cobertura del mercado de hoy en español aquí.

Stocks close higher Monday

The S&P 500 closed higher Monday.

The broader index traded 0.3% higher to 4136.28. Meanwhile, the Dow Jones Industrial Average snapped a five-day losing streak, gaining 47.98 points, or 0.14%, to 33,348.60. The tech-heavy Nasdaq Composite outperformed, rising 0.66% to 12,365.21.

— Sarah Min

Cathie Wood's ARK Innovation ETF rallies 2.4%, gains for 7th day in 8

Cathie Wood's flagship ARK Innovation ETF rallied 2.4% Monday and posted its 7th advance in the past eight sessions.

Elsewhere in growth-land, the Nasdaq Composite added 0.66%, outperforming the S&P 500 and the Dow Industrials and climbing for a 3rd day in four.

Nvidia contributed the most both to the Nasdaq and the S&P 500 advance Monday. The First Trust Dow Jones Internet Index Fund advanced 1.44% Monday, rising for the 3rd day in four.

— Chris Hayes, Scott Schnipper

Bank of America says a ‘May dip’ is ahead

Bank of America says a late-May dip will come ahead of a summer dip. 

"The SPX shows resistance near 4177-4195. Two bearish weekly hanging men candlesticks represent a stall near this resistance, increasing the risk of a May dip," analyst Stephen Suttmeier wrote in a Monday note. 

He added that "An expansion in the percentage of Russell 2000 stocks reaching new 52-week lows is a big risk for Russell 2000 and small cap stocks."

The analyst said that a similar expansion of new lows on the broad market index "would suggest that the contagion of weaker small cap breadth is moving up in terms of market cap, which would have more significant bearish implications for US equities."

— Hakyung Kim

Investors pulled back from U.S. equity funds in April, but jumped into risky high-yield bonds

U.S. equity funds lost about $5 billion in April, marking a sixth consecutive month of outflows, according to Morningstar's monthly fund flow report.

In particular, large value funds saw the sharpest inflows last month, losing $6.9 billion. "Momentum for these funds might be waning as growth stocks have rebounded in 2023," said Adam Sabban, senior manager research analyst, equity strategies at Morningstar.

But investors still had an appetite for risk, as they plowed $6.7 billion into high-yield bond funds. These funds tend to pick up flows as stocks rise and shed money as equities fall.

Investors also poured about $23 billion into taxable bond funds in April, bringing total year-to-date flows into these funds to $95 billion, Morningstar found. "While that sum led all category groups by a wide margin, taxable-bond funds still have work to do to claw back their 2022 outflows," Sabban said.

-Darla Mercado

S&P 500 rises slightly in the final hour of trading

The S&P 500 rose slightly in the final hour of trading.

The broader index was trading about 0.2% higher. Meanwhile, the Dow Jones Industrial Average gained 22 points, or 0.07%. The tech-heavy Nasdaq Composite outperformed, rising 0.55%.

— Sarah Min

Stocks could see big gains after narrow trading range, Bespoke says

Saying the S&P 500's been in a lull is an understatement. Bespoke Investment Group said the broader market index's trailing 30-day intraday high-low percentage spread last week reached its narrowest level going back to October 2018.

This comes as traders await for new developments on U.S. debt ceiling negotiations, as well as clues on the future path of monetary policy. However, there may be a silver lining to this tight trading range.

Bespoke found that the S&P 500 averages a 2.2% gain one month after trading at such a narrow range. That gain goes up to 5.4% and 13.1% after six and 12 months, respectively.

— Fred Imbert

This earnings season marks the 'lowest' number of S&P 500 companies discussing inflation since 2021, FactSet data shows

A notable trend has already surfaced as corporate earnings season wraps up — fewer S&P 500 companies are mentioning inflation on their conference calls, according to FactSet data.

Only 278 S&P 500 companies cited inflation in their first-quarter earnings calls, according to a FactSet review of transcripts from March 15 to May 11. While that figure is above the 5- and 10-year average, it's actually the lowest number of S&P 500 companies going back roughly two years.

"It should be noted that this is the lowest number of S&P 500 companies citing "inflation" on earnings calls going back to Q2 2021 at 222 (using current constituents and going back in time)," John Butters wrote in a Monday note. "It also marks the third consecutive quarter in which the number of S&P 500 companies citing the term 'inflation' has declined quarter-over-quarter."

To be sure, roughly 40 S&P 500 companies have yet to report, read the note. Nevertheless, the final tally will still fall below the 352 figure from the prior quarter.

— Sarah Min

Money market fund flows swelled as spooked depositors fled banks following SVB’s collapse

Since the March 10 collapse of Silicon Valley Bank in March, investors have yanked deposits from banks and plowed their cash into money market funds, according to analysis by Keefe Bruyette & Woods.

Since the Federal Reserve began its latest rate-hiking campaign more than a year ago, safer assets have been paying higher yields. This is the case for short-term Treasury bills – and products like money market funds and certificates of deposit that are in competition for savers' dollars.

The SVB debacle accelerated the trend of dollars flowing out of banks and cash flowing into money market funds, KBW found. Since then, money market funds have grown by more than $434 billion as of May 10, while total bank deposits have dropped $455 billion as of May 3, according to the firm.

"Money market funds are offering an attractive alternative for depositors seeking higher yield returns than bank deposit rates," KBW noted. "Banks are losing funding with rates paid on liquid deposits that are hundreds of basis points lower than money market funds offering yields near or even above 5%."

-Darla Mercado

BofA looks at which office REITs are keeping their buildings full

Bank of America put out a note Monday that reviewed the first-quarter earnings reports from the 14 office REITs it covers. Corporate Office Properties Trust is the clear standout on occupancy levels, analyst Camille Bonnel said. It has grown and held occupancy at around 93%. That compares with a sector portfolio that has fallen 80 basis points from the prior quarter to a rate of 87.5% — a 525 basis point decline from pre-pandemic levels.

BofA said it views Boston Properties, Cousins Properties, Empire State Realty Trust and Corporate Office as best positioned to improve occupancy levels into 2024.

"Positively, most REITs noted a pickup in leasing pipelines in recent weeks," Bonnel said.

Some in the industry still continue to expect that remote work may become less common once there is a labor market correction. If that's true, the pressure on office REITs could ease over time.

—Christina Cheddar Berk

There are six new S&P 500 highs

Of the six S&P 500 stocks that reached fresh peaks on Monday, five of them were trading at their all-time highs. Here are their names:  

• General Mills trading at all-time highs back to when it began trading on the NYSE in 1928
• Lamb Weston Holdings trading at its highest levels back to its IPO in Nov, 2016
• Pepsico trading at all-time highs back to Pepsi-Cola's merger with Frito-Lay in 1965 to form Pepsico
• Arthur J Gallagher trading at all-time high levels back to its IPO in June, 1984
• Boston Scientific trading at all-time high levels back to its IPO in May, 1992
• Oracle trading at levels not seen since Dec, 2021

Meanwhile, there were five new S&P 500 52-week lows:

• Newell Brand trading at lows not seen since Apr, 2009
• Catalent trading at lows not seen since Mar, 2020
• Danaher trading at lows not seen since Apr, 2021
• Organon trading at all-time lows back to its spin-off from Merck in June, 2021
• Pfizer trading at lows not seen since Apr, 2021

— Chris Hayes, Sarah Min

See the stocks making the biggest midday moves

These are some of the stocks making the biggest moves in midday trading:

• Shake Shack — The fast food chain's stock jumped more than 6% after the Wall Street Journal reported that activist investor Engaged Capital is planning a proxy fight for three board seats at the company. Engaged Capital bought a 6.6% stake in Shake Shack, including swaps.
• Western Digital — Western Digital advanced 8% in midday trading. A Reuters report said the firm is ramping up merger talks with computer memory company Kioxia Holdings
• Charles Schwab — The brokerage climbed 3% midday after Raymond James upgraded the stock and said it can rally almost 30%, as concerns about stability in U.S. banks have not affected Schwab's ability to attract new accounts and assets.

See the full list here.

— Alex Harring

S&P 500 sectors are split during midday trading

The S&P 500 was flat during midday trading, and a look under the hood showed the benchmark was about evenly split between gainers and decliners.

Just six out of 11 sectors in the broader index were trading in positive territory. Information technology, financials and materials stocks outperformed, gaining about 0.5%, 0.4% and 0.3%, respectively.

Utilities was the biggest laggard, down 1.5%. Health care stocks also fell, lower by 0.5%.

— Sarah Min

Regional banks outperform in the S&P 500, but on weak trading volume

Regional banks outperformed in the S&P 500 on Monday, but trading volume was lackluster.

Financials stocks rose 0.4% during midday trading. Shares of Comerica led the sector with a 5.8% gain, but trading volume was just north of 1.7 million shares — below the 30-day average of 4.7 million shares.

KeyCorp shares rose 5.7%. Trading volume for the bank was around 9.6 million shares, while shares typically trade around 26.8 million shares, according to the 30-day trading average.

— Sarah Min

Deutsche Bank upgrades DuPont, cites 'valuation discount'

Deutsche Bank is getting more bullish on shares of DuPont, citing the chemicals company's valuation discount to its peers.

"Since we downgraded DuPont in mid-January, the shares are down 15% versus a 3% gain for the S&P," wrote analyst David Begleiter in a Monday note to clients. "As a result, DuPont's shares now trade at a 50% discount to its peers."

Given this backdrop, the bank upped its price target on shares to $80, reflecting 25% upside from Friday's close. The stock rose 2% on Monday.

The analyst said "superior" earnings growth in 2024 and lower levels of mergers and acquisition activity should justify the price target and expectations for its multiple expansion.

— Samantha Subin

Tapestry rises after Bernstein upgrade

Tapestry shares popped more than 4% after Bernstein analyst Aneesha Sherman upgraded the Coach parent to outperform from market perform. Her price target of $55 per share also implies upside of 33.5% from Friday's close.

"Our near-term concerns are dissipating: N.Am demand weakness played out, Inventory under control, China demand surging," Sherman wrote. "Since our January downgrade, the three areas we were monitoring have all improved: N.Am weakness has played out for 2 Qs and is baked into guide/Cons, Inventory is back under control and now declining vs. sales, and China is poised to grow +50% in Q4 on reopening handbag demand."

— Fred Imbert, Michael Bloom

Sarepta shares soar as company inches closer to FDA approval of its gene therapy

Sarepta shares are soaring in trading Monday, up nearly 27%. On Friday, a Food and Drug Administration panel handed the company a mixed, but positive, opinion on its controversial gene therapy for Duchenne muscular dystrophy. That makes accelerated approval more likely.

Sarepta's drug helps the body make a form of the protein microdystrophin, which the company says can help patients of this muscle-wasting disease. Experts have been debating how much of a benefit the therapy provides.

This should be good news for Catalent, a company that would manufacture the gene therapy, but its stock hit a 52-week low in early trading after it revealed it was postponing the release of its fiscal third-quarter results until Friday. Shares are now flat.

— Christina Cheddar Berk

Newmont to acquire Australian miner Newcrest

Newmont announced Sunday it has agreed to acquire Australian miner Newcrest in one of the largest buyouts so far in 2023.

Newmont, a U.S.-based miner that focuses primarily on gold, is set to pay about $17.8 billion, according to Reuters. It is the third-largest global deal this year, Reuters calculated.

Shareholders of Newcrest will receive 0.400 Newmont shares for each Newcrest share, as well as a special dividend of up to $1.10 per share paid by Newcrest. That represents a 30.4% premium to Newcrest's closing price on February 3, before the bid became public.

Shares of Newmont were up about 1% in midday trading.

— Michelle Fox

EU approves Microsoft’s $69 billion acquisition of Activision Blizzard

European Union regulators on Monday approved Microsoft's proposed $69 billion acquisition of gaming firm Activision Blizzard, subject to remedies offered by the U.S. tech giant.

The European Commission, the EU's executive arm, said that Microsoft offered remedies in the nascent area of cloud gaming that have staved off antitrust concerns. These remedies centered on allowing users to stream Activision games they purchase on any cloud streaming platform.

Europe's green light is a huge win for Microsoft, after the U.K.'s top competition authority last month blocked the deal.

— Arjun Kharpal

Western Digital leads the S&P 500 following merger report

Western Digital was the top performer in the S&P 500 on Monday, advancing 7% during midday trading following a report that it's ramping up merger discussions with Japan's computer memory maker Kioxia Holdings.

The two firms are cementing a deal structure, according to a Reuters report citing two sources with direct knowledge of the matter.

— Sarah Min

Loop Capital downgrades Apple to hold

Loop downgraded Alphabet to hold from buy. The firm reiterated its $125 per share price target, which is 6.4% above Friday's close. Shares dipped 0.4% during midday trading.

"We think concern over whether the company can maintain its dominant position through this massive technology transformation will hold back valuation. We consider search competition from Microsoft a lesser threat than risk of displacement from behavioral change as users interact more with AI assistants to find information," analyst Rob Sanderson wrote in a Monday client note. 

CNBC Pro subscribers can read more about the upgrade here.

— Hakyung Kim

The S&P 500 needs 'more players on the field,' Strategas says

There's a difference between what markets look like on the surface and the "mess playing out" below, according to Strategas.

The S&P 500 was trading near its year-to-date highs, but only about half of its constituents — 49% — are trading above their 200-day moving averages, according to a Monday note. Meanwhile, just 65% of Nasdaq 100 constituents are above their 200-day moving averages, while only 30% of Russell 2000 constituents are doing the same.

"We'd be more willing to overlook this a few weeks, or even a few months, removed from a market low – but the S&P bottomed over 7 months ago now – by this stage, participation should be meaningfully broader," the firm's Chris Verrone wrote.

— Sarah Min

Loop Capital upgrades Meta Platforms to buy

Loop Capital sees "a much brighter revenue picture" ahead for Meta. 

The firm upgraded Meta shares to buy from hold in a Monday note. It said that, while expense rationalization was likely more of a "one-time driver," it is bullish on the overall revenue outlook for the tech company.

"Three significant headwinds to revenue (Apple ad tracking changes, foreign exchange and transition to Reels) are all cycling through and set to become tailwinds. Combined we estimate these pressures had around mid-teens percent headwind to revenue growth," wrote analyst Rob Sanderson. 

CNBC Pro subscribers can read more about the upgrade here.

— Hakyung Kim

Stocks rise slightly at open

The major averages ticked higher in early trading. The Dow rose about 20 points. The S&P 500 and Nasdaq advanced 0.1% each.

— Fred Imbert

U.S. dollar hits all-time high against Turkish currency following announcement of runoff election

The dollar hit a record high against the Turkish lira on Monday, reaching 19.6853.

Meanwhile, the iShares Turkey ETF (TUR) was down nearly 6% in premarket trading. If that performance holds in the session, it would mark the worst day for the fund since it lost of 6.1% on Feb. 7.

The moves follow news that the country will have an unprecedented runoff election for its president on May 28. A runoff is required because no candidate got 50% of the vote in Sunday's election.

The dollar index, which measures the U.S. greenback against a basket of other currencies, was last down 0.2% at 102.49.

— Alex Harring, Gina Francolla

There's 'good news' as deal talks build in Washington, Oppenheimer says

For investors worried over ongoing debt ceiling negotiations, there's "good news" — deal talks seem to be building in Washington, according to Oppenheimer Asset Management.

"The good news in our view is that amid elevated concerns among market participants, efforts to resolve the situation over raising the debt ceiling appear to have been ramped up over the past few days," John Stoltzfus, chief investment strategist at the firm, said in a Monday note.

The strategist said investors instead appear to be "looking ahead to the potential benefits likely to come from the Fed's current actions to bring about what we view as an end of a period of 'free money.'" The "next new normal" could mean a backdrop where momentum takes a "back seat" to fundamentals.

— Sarah Min

New York manufacturing reading collapses in May

Manufacturing activity in the New York area collapsed in May, with new orders and shipments dropping while prices increased, according to the Federal Reserve.

The Empire State Manufacturing survey fell 43 points from April to a reading of -31.8, below the Dow Jones estimate of -5. The index represents the level of companies reporting expansion against contraction.

New orders fell 53 points while shipments tumbled more than 40 points. Prices paid edged higher while prices received were little changed and the employment index rose, though was still in negative territory at -3.3.

—Jeff Cox

Stocks making the biggest premarket moves

Here are some of the names making the biggest moves in premarket trading:

• Magellan Midstream Partners, Oneok — Shares of Magellan Midstream Partners jumped 15.5% following the announcement that pipeline operator Oneok is acquiring the company for about $18.8 billion. Oneok's stock sank 5.5%.
• H&R Block, Intuit—The tax preparers fell 9.4% and 4.7%, respectively, following a Wall Street Journal report on the potential creation of a government-run online tax filing program. The IRS is expected to release the report this week, the paper said. The agency has been looking into it as part of the Inflation Reduction Act.
• SoFi Technologies—The stock dropped nearly 7% after being downgraded to underperform from neutral by Wedbush. The firm said SoFi's fee income may be reaching a tipping point and it may need to raise capital this year to support growth.

To see more names making moves in the premarket, read the full story here.

— Michelle Fox

Fed's Bostic doesn't see rate cuts coming this year

Atlanta Federal Reserve President Raphael Bostic cast doubt Tuesday on the likelihood of interest rate cuts this year, even if a recession should hit.

"Inflation is not going to come down very quickly. And in that regard, then, cutting rates doesn't really fit into that scenario," the central bank official told CNBC's Steve Liesman during a "Squawk Box" interview.

"So the markets, I think, have been pretty optimistic about how easily inflation will respond to our policy," he added. "Honestly, I hope I'm wrong and they're right, because that'll mean that the economy's in balance sooner than later. But it's not my baseline case at all."

If anything, Bostic said his bias would be to a rate increase this year should inflation not come down as quickly as the Fed would like.

—Jeff Cox

Shake Shack jumps after activist investor launches proxy fight

Shares of Shake Shack jumped nearly 4% in premarket trading Monday after the Wall Street Journal reported that activist investor Engaged Capital is planning a proxy fight for three board seats at the company. Engaged Capital acquired a 6.6% stake including swaps.

The stock has rebounded 57% this year but it's still trading about half of its all-time high in early 2021.

— Yun Li

Baird upgrades Albemarle to outperform

Baird upgraded lithium producer Albemarle to outperform. The firm also raised its price target to $288 from $222, which implies a gain of 47% from Friday's close. 

"ALB is down ~41% from its highs less than a year ago, and we believe that clarity on the impact of pricing, a reset of guidance, and ALB's vertically integrated system position it as a leader for the near and longer term," analyst Ben Kallo wrote in a Monday note. 

He noted that lithium prices have tumbled more than 40% year to date. Nonetheless, Baird thinks there is a significant imbalance in the supply and demand levels for lithium, particularly as stationary lithium-ion battery storage for electric vehicles rises.

CNBC Pro subscribers can read more about his upgrade here.

— Hakyung Kim

Yellen is 'hopeful' on debt ceiling deal

Treasury Secretary Janet Yellen said over the weekend negotiations were making progress on a debt ceiling deal.

"I'm hopeful. I think the negotiations are very active. I'm told they have found some areas of agreement," said Yellen in an interview with the Wall Street Journal on Saturday from Japan during a meeting of G-7 finance ministers.

President Joe Biden and House Speaker Kevin McCarthy are expected to meet early this week, CNBC has reported. The Treasury Department said the U.S. may not be able to meet its financial obligations as early as June 1.

—John Melloy

Raymond James upgrades Charles Schwab

Raymond James analyst Patrick O'Shaughnessy upgraded Charles Schwab to outperform from market perform, and his price target on the stock implies upside of nearly 30%.

"Concerns about the stability of the banking system have not impaired Schwab's ability to attract new accounts and assets. In fact, net new accounts grew at a 4.3% annualized pace in 1Q23 while core net new assets grew at a 7.5% pace," O'Shaughnessy said.

Schwab shares rose more than 2% in the premarket.

— Hakyung Kim

European markets open mixed as focus turns to Turkey's presidential election

European markets open mixed on Monday as investors in the region focus on the results of Turkey's presidential election.

The pan-European Stoxx 600 index was up 0.3% around market open, with most sectors making marginal gains. Banking stocks and travel and leisure were up 0.7%, while oil and gas shed 0.7%.

— Hannah Ward-Glenton

Good news for markets next week. Everyone agrees the debt ceiling ‘X-date’ is not here yet

Washington can hardly agree on anything, but the consensus everywhere is that the "X date," when the Treasury can no longer pay the government's bills unless the debt ceiling is raised, won't arrive any earlier than June 1 — and maybe not for weeks after.

Good news for markets next week: no default, no credit agency downgrade, no apocalypse. Just further talks between White House and Congressional staffers, leading to another meeting between President Joe Biden and Congressional leaders before Biden leaves next Wednesday for a G-7 summit in Tokyo.

The bad news is that complacency is nigh in the stock market, as shown by the CBOE Market Volatility Index (the VIX) trading below 18 on Friday, and having fallen almost 22% in 2023.

CNBC Pro subscribers can read the full story here.

— Scott Schnipper

The latest Empire State Index reading due Monday before the open

Investors are awaiting May data for the Empire State Index, which will show how New York State manufacturers feel about the economy.

Economists polled by Dow Jones are expecting a reading of 1.0, which would be lower than the 10.8 level in previous data.

The data is set to release Monday before the open.

— Sarah Min

Stock futures open slightly lower

U.S. stock futures dipped on Sunday night.

Dow Jones Industrial Average futures traded lower by 38 points, or 0.1%. S&P 500 futures and Nasdaq 100 futures pulled back by 0.1% and 0.16%, respectively.

— Sarah Min