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Stocks Slip as Investors Look to House Vote on Debt Ceiling, Nasdaq Pops Nearly 6% in May: Live Updates

Source: NYSE

Stocks fell Wednesday as investors kept an eye on the federal debt ceiling debate in Washington in the final trading day of May.

The Dow Jones Industrial Average traded 134.51 points lower, or 0.41%, to end at 32,908.27. The S&P 500 dipped 0.61% to close at 4,179.83. The Nasdaq Composite slipped 0.63%, finishing at 12,935.29.

The deal, which was reached over the weekend by President Joe Biden and House Speaker Kevin McCarthy, cleared a major test Tuesday night after advancing to the House floor following a 7-6 vote in the House Rules Committee. The floor vote is expected to take place Wednesday evening. "I think we have the votes to pass this today," said Rep. Patrick McHenry, a GOP negotiator on the debt deal, on CNBC's "Squawk Box" Wednesday morning.

Sam Stovall, chief investment strategist at CFRA Research, said a debt ceiling deal will likely pass before the U.S. would default, but investors are wondering if more changes and time are needed before an official agreement can be reached. Once a bill is approved, he said market participants will shift focus to the June Federal Reserve policy meeting.

"Some investors are worried that the high-decibel, dissenting fringes might end up causing this vote to fail and require some adjustments before it ends up passing," Stovall said. "People are taking whatever profits they can ahead of the vote tonight."

Wednesday's close marked the end of the May trading month. The Nasdaq Composite finished the month 5.8% higher, helped by a rally in artificial intelligence-related stocks and other technology names. The S&P 500 added nearly 0.3% in the month, despite at one point relinquishing its month-to-date gains during Wednesday's selloff. The Dow fell almost 3.5% in the month, pulled down by May losses greater than 10% from Nike, Walt Disney, Walgreens, 3M, Chevron and Dow, Inc.

Correction: Nvidia's market cap briefly topped $1 trillion on Tuesday. A previous version misstated the date.

Lea la cobertura del mercado de hoy en español aquí.

Stocks close lower

The three major indexes closed lower on Wednesday, which marked the end of the May trading month.

The Dow lost 0.4%, while the S&P 500 and Nasdaq Composite each slipped 0.6%.

With Wednesday's close, the Dow finished the month down almost 3.5%. The S&P 500 finished May up about 0.3%, wile the Nasdaq surged 5.8%.

— Alex Harring

Consumers’ excess savings are on track to dry up as early as this fall, says Roth MKM

U.S. consumers built up their savings during the pandemic era, as stimulus relief payments went out to households. But now, those cash cushions are looking thin, according to an analysis by Roth MKM.

Households gathered excess savings to the tune of $2.1 trillion through August 2021 as the federal government issued stimulus packages to the public, but those cash reserves began to slide since then, according to data from the Federal Reserve Bank of San Francisco. Cumulative drawdowns hit $1.6 trillion as of March 2023.

Roth MKM's analysis of this data showed that excess savings will be gone by October – and companies will feel the pinch.

"This may be around the time that services industries, which have been in the slipstream of a post pandemic spending frenzy… begin to flag," wrote Roth MKM chief economist and market strategist Michael Darda.

He anticipates that a recession is likely to kick off "sometime this summer or fall."

-Darla Mercado

Wells Fargo names American Express as one of its top recession picks

Wells Fargo named American Express one of its top picks for a tougher recession scenario. The firm said the payment card company has an excellent risk-reward valuation — even in the case of revenue growth being cut in half.

"Their ability to flex peak investment expense is a powerful lever," Wells Fargo said in a Wednesday client note. 

The firm maintained its overweight rating on shares. It also kept its $200 price target on shares, which implies 26.6% upside from Tuesday's close. 

CNBC Pro subscribers can read more about the call here.

— Hakyung Kim

June has historically been a bad month for the Dow and S&P 500

Seasonal weakness could be ahead if history repeats itself.

June has historically been the ninth worst month of the year for the S&P 500 and the 11th worst for the Dow, according to data analyzed by The Stock Trader's Almanac.

A typical June since 1950 brings a return of 0.1% for the S&P 500 compared with a 0.72% average gain of all months in the same time period. And an average June has historically resulted in a 0.2% loss for the Dow, while the 30-stock index has advanced 0.67% when averaging all months over the same time period.

— Alex Harring

Franklin Resources announces acquisition of Putnam Investments

Investment firm Franklin Resources announced a deal on Wednesday to acquire asset manager Putnam Investments for roughly $925 million.

The deal is part of a broader partnership between Franklin, the Power Corporation of Canada, and Great-West Lifeco, which is the current parent company of Putnam. Great-West will also allocate $25 billion to Franklin Templeton managers.

Franklin will pay $100 million in cash for Putnam, with the rest of the deal in stock. Shares of Franklin were down about 2.6% on Wednesday.

— Jesse Pound

Indexes remain on pace for losses entering final hour

The three major indexes remain on track to see losses in Wednesday's session.

The Dow and Nasdaq Composite are both down 0.4%, while the S&P 500 has dropped 0.5%.

Wednesday also marks the end of the trading month. The Nasdaq Composite is on pace to finish 6% higher, helped by a rally in tech stocks. The S&P 500 is poised for a relatively modest 0.4% advance.

On the other hand, the Dow is on track for a 3.5% loss. Dow members Nike, Disney, Walgreens, 3M, Chevron and Dow, Inc. are all slated to finish the month more than 10% lower. Just six of the index's 30 stocks are poised for monthly gains, with Salesforce leading the way at 11.7% up.

— Alex Harring

Bank of America says Eli Lilly has a backdoor for coverage of obesity drugs

Bank of America said only 40 million people have "theoretical access" to insurance reimbursement for Novo Nordisk's Wegovy (semaglutide) obesity medication in a target market of approximately 110 million. Eli Lilly is likely to face similar obstacles with insurers when tirzepatide is approved to treat obesity, but analyst Geoff Meacham expects the company is looking at other ways to win coverage.

"We think Lilly and Novo's 'wall of data' strategy makes a lot of sense to achieve broad coverage, underpinning our belief that access is a 'when, not if," Meacham wrote in a research note.

Novo will be sharing results soon in its Select trial, which studies whether taking patients taking semaglutide are reducing their cardiovascular risks. The idea is to convince insurers they are saving money in the long run by helping patients lose weight. Other studies are in the works to look at benefits for obstructive sleep apnea and chronic kidney disease.

—Christina Cheddar Berk

Microsoft shares could rally more than 20% on A.I.-story, says Piper Sandler

Piper Sandler analyst Brent Bracelin raised his price target on Microsoft shares to $400 from $348, saying he was increasing estimates "for an AI All-Star." The new price target implies 20.7% upside from where the stock closed on Tuesday.

He also maintained his overweight rating on the stock, noting the company's AI tailwinds have parallels to its large Cloud division.

"We have increasing confidence that MSFT has the courage, conviction, and history to bring AI to the masses based on bullish commentary coming from 3P data for April and the Build developer conference in Seattle," Bracelin wrote in a Tuesday note. 

CNBC Pro subscribers can read more about the price target raise here.

— Hakyung Kim

Disappointing guidance pressure Michael Kors parent Capri

Shares of Capri Holdings, which owns Versace, Jimmy Choo and Michael Kors, dropped more than 10% after the company issued disappointing fiscal first-quarter guidance. Capri sees earnings around 70 cents per share, well below a StreetAccount forecast of $1.41 per share.

— Fred Imbert

Fed's Harker says he supports a rate hike pause

Philadelphia Fed President Patrick Harker said Wednesday that he's leaning toward not raising rates at the central bank's June meeting.

"I am in the camp increasingly coming into this meeting thinking that we really should skip," Harker said. To be sure, he added that Friday's jobs report could change his mind. Following those comments, the CME Group's FedWatch tool showed only a 24% chance of the Fed raising rates.

— Fred Imbert

Warren Buffett bought more Occidental shares

Warren Buffett's Berkshire Hathaway bought more shares of Occidental Petroleum over the last three trading days, boosting its stake in the Houston-based oil and gas producer to 24.9%, according to a regulatory filing.

The Omaha, Nebraska-based conglomerate purchased a total of of 4.7 million shares for $273 million on Thursday, Friday and Tuesday at prices up to $58.85.

Berkshire has been adding to its already-large stake this month even after Buffett knocked down speculation that he would take full control of the oil company. Last year, Berkshire received regulatory approval to purchase as much as a 50% stake. 

— Yun Li

Stocks making midday moves

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

  • Advance Auto Parts — The stock dropped about 34% after the car parts retailer reported an adjusted earnings per share of 72 cents, widely missing analysts' estimates of $2.57, per Refinitiv. The company also cut its quarterly dividend and full-year guidance.
  • C3.ai — Shares fell nearly 11% ahead of the company's quarterly results after the close. C3.ai, the AI software maker has soared more than 250% so far this year.
  • Micron Technology – The chip stock slipped 4% after the company said at a conference its third-quarter trends have been consistent with guidance and the company sees no need to raise it. However, Micron noted revenue growth guidance that is nearer to the high end of its previously stated range.

Click here to read more stocks making midday moves.

— Michelle Fox

Goldman Sachs initiates coverage of SeaWorld

Now is the time to buy SeaWorld shares, according to Goldman Sachs. 

Analyst Lizzie Dove initiated coverage on the Florida theme park with a buy rating. She set her price target at $75 per share, implying a 34% rally from Tuesday's close. 

Despite investor caution on park stocks amid an uncertain macro environment, Dove said the risk has already been priced into shares.

"We believe ongoing cost-cutting initiatives and growth opportunities from international licensing and domestic resort potential are both underappreciated by investors," Dove wrote in a Wednesday note.

To read more about her call, click here.

— Hakyung Kim

S&P 500 sector performance varies widely in May

Sectors are diverging in monthly performance with just hours left in the May trading period.

Just three of the 11 S&P 500 sectors are set the finish the month higher. Information technology has rallied the most with a 9.7% advance, followed by communication services at 6.1% and consumer discretionary at 1.9%.

The index as a whole, by comparison, is flickering around its monthly flatline despite the majority of sectors trading notably down. Energy, the worst performer of the 11 sectors, is down 10.5% this month.

Here's where the 11 stand, in order from best to worst performing this month:

  • Information technology: up 9.7%
  • Communication services: up 6.1%
  • Consumer discretionary: up 1.9%
  • Industrials: down 3.4%
  • Financials: down 4.9%
  • Health care: down 4.9%
  • Real estate: down 5%
  • Consumer staples: down 6.1%
  • Utilities: down 6.6%
  • Materials: down 7%
  • Energy: down 10.5%

— Alex Harring

First-quarter deposit outflows were largest since at least 1984, FDIC says

U.S. bank deposits declined by $472.1 billion in first quarter, according to a report released Wednesday by the Federal Deposit Insurance Commission.

FDIC Chairman Martin Gruenberg said in a statement that the first quarter deposit outflow was the largest dating back to at least 1984. It was also the fourth consecutive quarter of outflows.

The outflows were driven by larger accounts. Uninsured deposits declined by 8.2%, while insured deposits actually rose by 2.5%, Gruenberg said.

Bank stocks were falling on Wednesday, with the Financial Select Sector SPDR Fund (XLF) down 1.8%.

— Jesse Pound

Intel pops after bullish comments from CFO

Intel shares popped more than 4% after the chipmaker's finance chief said the company could soon see a turnaround.

Speaking at a conference, CFO David Zinsner said the company's data center division is starting to "turn the corner," while adding that China inventory should start to ease after the third quarter. He also said second-quarter revenue will come in at the high end of of its guidance.

Intel shares have lagged Nvidia this year, as investors see the legacy chipmaker as losing out on its rival in the AI-driven boom. Year to date Intel is up 17%, while Nvidia has more than doubled in that time.

— Fred Imbert

Domino's Pizza, Estee Lauder, 3M and more hit new 52-week lows

20 companies on the S&P 500 hit new 52-week lows on Wednesday.

Meanwhile, Dow components Apple, Salesforce and Microsoft are trading at 52-week highs.

— Hakyung Kim, Chris Hayes

Wednesday selloff pulls S&P 500 below flatline for month

A nearly 0.9% drop in the S&P 500 during Wednesday's session has brought the broad index into negative territory for the month.

The index was last down about 0.03% month to date and traded close to the flatline, at times pulling back into positive territory. It was notably up on the month heading into Wednesday's session, which is the last of May's trading month.

— Alex Harring

Bitcoin and ether on pace for first losing month of the year

Bitcoin fell on Wednesday and was on track to post a down month as optimism around the debt ceiling rally fizzled.

The crypto market leader lost 3% and was trading at $26,879.49, according to Coin Metrics. Ether slipped more than 2% to $1,855.55.

Both cryptocurrencies were heading for their first losing month in 2023. Bitcoin is track to post a 8% loss, which would be its worst month since November 2022. Ether is down 2.5% this month. If it ends the day in the red, that will make May its worst month since December 2022.

For more on what's driving crypto prices, read our full story here.

— Tanaya Macheel

April job openings unexpectedly rise, but Chicago PMI misses

The latest U.S. job openings and labor turnover survey (JOLTS) shows openings increased to more than 10 million in April from 9.6 million in March. Economists polled by Dow Jones expected a decline to 9.5 million.

"The surge in job openings defied expectations for a decline and stands as another testament to the resilience of the labor market," wrote Bankrate senior economic analyst Mark Hamrick.

To be sure, not all data released Wednesday was positive. The Chicago PMI reading for May came in at 40.4, well below a Dow Jones forecast of 47.

— Fred Imbert

Energy ETF on pace for worst month since September

The Energy Select Sector SPDR Fund's declined 9.8% in May as oil price slump, putting it on pace for its worst monthly stretch since last September.

The biggest laggards include APA Corp, Devon Energy, Exxon Mobil, Hess and Marathon Petroleum, all down at least 10% this month.

In September, the XLE lost 10.5%.

— Samantha Subin, Gina Francolla

Dollar index reaches highest levels since March

The dollar index reached a fresh high of 104.361 Wednesday morning, marking its highest level since March 16. It pulled back slightly to 104.28 as of 9:52 a.m. ET.

The index, which weighs the U.S. greenback against a basket of currencies, is up 2.73% month to date, putting it on pace for its best month since September 2022, when it rose 3.14%.

— Hakyung Kim

Stocks open lower

The three major indexes were trading down as Wednesday's session kicked off.

The Dow and S&P 500 were both down 0.4%, while the Nasdaq Composite slipped 0.3%.

— Alex Harring

Citi says 'stay long' on Nvidia

Investors looking to play generative artificial intelligence should "stay long" on Nvidia, Citi says.

Analyst Atif Malik highlighted three product announcements that should contribute to the company's growth overtime. That includes its AI-focused optimized Ethernet platform known as Spectrum-X and full production of its GH200 Grace-Hopper Superchip, he said.

"We estimate all three announcements depict NVIDIA's effort to lean on its existing AI accelerator dominance to establish a robust presence in what is potentially for the company a mostly untapped combined accelerated computing TAM of $1T+ going from AI networking to the largely CPU-centered server market," he wrote.

— Samantha Subin

Deutsche upgrades Avis Budget to buy

Deutsche Bank analyst Chris Woronka upgraded shares of Avis to buy from hold. He also raised his price target to $263 from $239, implying 61% upside potential from Tuesday's close. 

"While our call is primarily valuation-centric, we also see a potential catalyst in the form of a likely return to share repurchases in the back half of the year," Woronka wrote in a Wednesday note. 

Shares were flat Wednesday before the bell.

CNBC Pro subscribers can read more about his upgrade here.

— Hakyung Kim

Stocks making the biggest moves premarket

These are some of the companies making headlines in premarket trading:

  • Ambarella — The chip stock shed 18% after Ambarella shared disappointing guidance for the second quarter. Ambarella expects second-quarter revenue between $60 million and $64 million. Analysts expected guidance around $66.9 million, according to StreetAccount.
  • Advance Auto Parts — The car parts retailer plummeted more than 25% after a wide earnings miss. The company reported an adjusted 72 cents per share against a Refinitiv consensus forecast of $2.57 per share. Advance Auto Parts also slashed its quarterly dividend.
  • C3.AI — The artificial intelligence stock declined 5.8% ahead of of quarterly results on Wednesday. Analysts polled by FactSet forecast an adjusted quarterly profit of 3 cents per share.

Read the full list here.

— Brian Evans

American Airlines raises Q2 guidance

American Airlines shares rose 1.7% in premarket trading after the company raised expectations for the second quarter.

The air carrier increased its earnings per share expectation from between $1.20 and $1.40 to between $1.45 and $1.65. It also increased its margin expectations, to between 12.5% and 14.5% from between 11% and 13%.

— Tanaya Macheel

Advance Auto Parts plunges after big earnings miss

Shares of Advance Auto Parts plunged more than 27% before the bell after the car parts and equipment retailer posted a big earnings miss.

The company earned 72 cents per share, well below the Refinitiv forecast of $2.57 per share. Revenue of $3.42 billion was also slightly below expectations.

On top of that, Advance Auto Parts cut its full-year earnings guidance and slashed its quarterly dividend by more than 80% to 25 cents per share from $1.50 per share.

"While we anticipated the first quarter would be challenging, our results were below our expectations," CEO Tom Greco said. "Our operating margin rate of 2.6% in the quarter was well below expectations due to higher than planned investments to narrow competitive price gaps in the professional sales channel as well as unfavorable product mix."

— Fred Imbert

Dow on pace to underperform in May

With just Wednesday's session left in the May trading month, the Dow is on track to lag.

The blue-chip average is slated to end the month down 3.1%. Nike and Walgreens led the index down this month with drops larger than 15% each. Just five of the index's 30 stocks are poised for monthly gains.

Meanwhile, the Nasdaq Composite and S&P 500 have added about 0.9% and 6.5%, respectively. Both have been helped by excitement around artificial intelligence that has prompted rallies in technology stocks.

— Alex Harring

McHenry says House has the votes to pass debt deal Wednesday

One of the GOP negotiators for the debt ceiling deal is confident about it getting through the House of Representatives.

"I think we have the votes to pass this today," said Rep. Patrick McHenry of North Carolina, on CNBC's "Squawk Box" Wednesday morning.

The bill to raise the debt ceiling cleared the House Rules Committee Tuesday night and will likely be voted on by the full House Wednesday night.

Markets are on edge still this week on fears there's enough opposition in Congress to scuttle the deal.

— John Melloy

HPE falls after mixed results

Hewlett Packard Enterprise fell nearly 8% on the back of mixed quarterly numbers. The company earned an adjusted 52 cents per share, beating a Refinitiv forecast of 48 cents per share. However, revenue of $6.97 billion was below a consensus estimate of $7.31 billion.

— Fred Imbert

Hong Kong stocks plunge nearly 3%, index falls into bear market territory

Hong Kong's Hang Seng index fell nearly 3% in Wednesday's afternoon session, entering bear market territory on an intraday basis as it hit levels more than 20% below its January peak.

The decline was led by basic materials, energy, health care and technology stocks – the Hang Seng Tech index fell 3.62%.

Shares of NetEase fell 6.45%, Meituan shed 5.5%, Baidu fell 5.34%, and JD.com declined 5.31%.

– Jihye Lee

North Korea says its first spy satellite launch ends in failure, defense stocks flat

North Korea's first attempt at launching a military spy satellite resulted in failure on Wednesday, with South Korea's military picking up wreckage after the carrier rocket crashed into its western waters.

North Korea's state media agency, the Korean Central News Agency, said that an "accident" occurred during the launch of a military reconnaissance satellite.

"The carrier rocket 'Chollima-1' fell to the West Sea of Korea after losing thrust due to the abnormal starting of the second-stage engine after the separation of the first stage during the normal flight," it said on the English language version of its website.

South Korean defense stocks seemed unmoved by the Wednesday launch, with Hanwha Aerospace and Korea Aerospace both flat in Seoul's afternoon trade.

– Jihye Lee

China's factory activity disappoints

China's official measure of factory activity for May came in at 48.8, below the 50-mark that separates growth from contraction — and missing the 49.4 estimate from a Reuters poll.

A weak read in that manufacturing measure "has been a solid precursor to policy easing," Morgan Stanley analysts said in a May 17 report.

"If growth does not accelerate sufficiently to narrow the output gap, social stability risk may rise and eventually trigger more meaningful stimulus," they said.

The National Bureau of Statistics noted the purchasing managers' index for large manufacturers came in at 50, while that of smaller manufacturers was lower. The index for services activity remained in expansionary territory at 54.5, but marked a second-straight month of decline.

— Evelyn Cheng, Jihye Lee

Australia's inflation rose more than expected to 6.8% in April

Australia's headline inflation hit 6.8% in April, higher than the range of expectations from economists polled by Reuters. The poll of 19 economists saw predictions range from 5.9% to 6.6%.

The country's statistics bureau elaborated that the most significant price rises were in housing, which saw a year-on-year increase of 8.9%.

This was followed by increases in food and non-alcoholic beverages, as well as transport, which saw increases of 7.9% and 7.1% respectively.

— Lim Hui Jie

Debt ceiling bill appears likely to pass House Rules Committee

The debt ceiling bill hammered out by President Joe Biden and House Speaker Kevin McCarthy appeared poised to pass a key committee on Tuesday evening.

Rep. Thomas Massie of Kentucky, a Republican swing vote on the House Rules Committee, said late Tuesday that he anticipates voting for a rule that would send the bill to the floor.

If the bill is sent to the floor, it is tentatively scheduled to have a vote on Wednesday night.

— Christina Wilkie, Emma Kinery, Jesse Pound

Stock futures open flat

Stock futures opened little changed on Tuesday evening, with futures for the Dow, S&P 500 and Nasdaq 100 all marginally lower.

— Jesse Pound

Ambarella slides after issuing soft guidance

Shares of chipmaker Ambarella fell more than 12% in extended trading after the company's second-quarter revenue guidance came in short of expectations.

Ambarella, like many other chip stocks, has risen sharply in recent weeks amid investor excitement around the demand for semiconductors from breakthroughs in artificial intelligence. However, the slide in extended trading threatens to erase more than half of Ambarella's gains in May.

Check out more after-hours movers here.

— Jesse Pound

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