The U.S. stock market remained stuck in a tight range, with investors waiting for clarity on whether Washington lawmakers will be able to reach a deal to avert a U.S. default.

Equities saw small gains ahead of a meeting between President Joe Biden and House Speaker Kevin McCarthy — with both sides sending mixed signals. A US$382 billion exchange-traded fund tracking the S&P 500 barely budged after Treasury Secretary Janet Yellen reiterated late Monday that her department could run out of cash as soon as June 1 unless Congress raises or suspends the federal debt limit.

Stocks fell earlier in the day as data showed New York manufacturing plunged the most since April 2020. This week’s figures will likely underscore more economic weakness, emboldening the Fed’s dovish voices even though inflation has failed to reassure, according to Anna Wong at Bloomberg Economics. Two Federal Reserve officials indicated they favored pausing rate hikes.

Results from retailers like giant Walmart Inc. will also be highly scrutinized over the next few days.

‘LITTLE CONVICTION’

“There is little conviction on either side as the market continues to digest earnings, a slew of economic data, and finger-pointing in Washington regarding the debt ceiling discussions,” said Craig Johnson, chief market technician at Piper Sandler.

To Chris Larkin at E*Trade from Morgan Stanley, it’s fair to ask whether the low equity volatility suggests the market is being too complacent — especially after the S&P 500 notched its narrowest non-holiday weekly range since August 2021.

“A debt default may not be the most likely scenario, but any prolonged debate or unexpected development has the potential to trigger higher volatility,” he noted.

JPMorgan Chase & Co.’s Marko Kolanovic joined a chorus of Wall Street strategists Monday in warning that the US debt-ceiling impasse is yet another headwind threatening the outlook for equity markets.

Morgan Stanley’s Mike Wilson delivered a similar warning on the debt-ceiling deadline, noting the bank’s clients said the issue is unlikely to be resolved without some near-term volatility. Meanwhile, BlackRock Investment Institute’s Jean Boivin and Wei Li said they expect a potential debt showdown to trigger renewed volatility.

Key events this week:

• China retail sales, industrial production, Tuesday
• Eurozone GDP, Tuesday
• U.S. retail sales, industrial production, business inventories, Tuesday
• Fed speakers include Cleveland’s Loretta Mester, New York’s John Williams, Atlanta’s Raphael Bostic and Chicago’s Austan Goolsbee, Tuesday
• Eurozone CPI, Wednesday
• BOE Governor Andrew Bailey delivers keynote speech, Wednesday
• U.S. housing starts, Wednesday
• U.S. initial jobless claims, Conference Board leading index, existing home sales, Thursday
• Japan CPI, Friday
• ECB President Christine Lagarde participates in panel at Brazil central bank conference, Friday
• New York Fed’s John Williams speaks at monetary policy research conference in Washington; Fed Chair Jerome Powell and former chair Ben Bernanke to take part in panel discussion, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 rose 0.3 per cent as of 4 p.m. New York time
• The Nasdaq 100 rose 0.5 per cent
• The Dow Jones Industrial Average rose 0.1 per cent
• The MSCI World index rose 0.4 per cent

Currencies

• The Bloomberg Dollar Spot Index fell 0.3 per cent
• The euro rose 0.2 per cent to US$1.0875
• The British pound rose 0.6 per cent to $1.2530
• The Japanese yen fell 0.3 per cent to 136.06 per dollar

Cryptocurrencies

• Bitcoin rose 1.7 per cent to $27,413.57
• Ether rose 1.7 per cent to $1,828.92

Bonds

• The yield on 10-year Treasuries advanced three basis points to 3.49 per cent
• Germany’s 10-year yield advanced three basis points to 2.31 per cent
• Britain’s 10-year yield advanced four basis points to 3.82 per cent

Commodities

• West Texas Intermediate crude rose 1.6 per cent to $71.14 a barrel
• Gold futures were little changed