Debt ceiling negotiations remain the major headline with McCarthy saying both sides are far apart on some issues but he believes a deal will be secured.

Fed staff continue to forecast a mild recession starting later this year given the expected further tightening in financial and bank credit conditions.

Retail outperformed, particularly after apparel reported well-received results from Abercrombie and Fitch, Kohl’s, and Urban Outfitters.

Initial jobless and continuing claims are due out in the morning.

US equities finished lower in Tuesday trading, ending near worst levels, with the Dow, S&P, and Nasdaq down .69%, 1.12%, and 1.26%, respectively. The biggest decliners included steel, homebuilders, hospitals, managed care, exchanges, payment rails, semicaps, hotels, and casinos, while energy, banks, airlines, credit cards, housing-linked retail, department stores, and media and entertainment outperformed. There is still not a lot of readthrough in sector performance again. That said, the debt ceiling remains top of mind for the markets, with today's negotiating session having concluded with still no sign of progress. Looking ahead, May FOMC meeting minutes are out tomorrow at 2 pm. The minutes will likely focus on timing of Fed's expected assessment period and what factors could trigger further tightening. The market will also be scrutinizing the extent of any pushback against pivot expectations.

US equities were mostly higher in fairly uneventful Monday trading, though the S&P ended off session highs and just under 4200 level. The latest US debt ceiling updates are skewing positive, with House Speaker McCarthy saying nothing has been agreed to, but said a deal could potentially be reached as soon as tonight and that it's still possible to push through Congress by 1-Jun. Meanwhile, it was another busy day of Fedspeak that provided some more hawkish takes.

US equities were higher this week, with the S&P 500 up for the first time in three weeks and breaking a six-week streak of absolute changes of less than 1%. Upside was driven by factors including optimism around a debt ceiling resolution, support for the soft landing narrative from economic data and retail earnings, and tech leadership with some positive spillover into semis and AI. Still, there was a big backup rates despite the resilient data, new debt ceiling uncertainty after some negative updates Friday, and a repricing for more hawkish Fed.

Big tech leading the gainers with FANMAGs coming in higher as Netflix outperformed on their ad-supported offering.

The Fed remains in the headlines as investors try to interpret hawkish higher-for-longer messaging with market hopes of a rate cut in the 2nd half.

In Washington, Speaker of the House, Kevin McCarthy said the debt limit talks are in a much better place as he sees a deal on the House floor by next week. All eyes remain on Secretary Yellen's X-date on June 1st.

US equities finished higher in fairly quiet Wednesday trading, ending just off best levels, with the Dow Jones, S&P500, and Nasdaq finishing up 124bps, 119bps, and 128bps respectively. Risk-on move was driven by some positive debt ceiling and regional banking developments. Quiet on the data front ahead of claims tomorrow. April housing starts were in line and March revised down while building permits were light.

Somewhat of a mixed bag today. Growth worries along with the weak China April activity data. In addition, debt ceiling a big overhang with McCarthy still talking about a lack of progress. Tech outperformance keeping scrutiny on weak market breadth. Also some focus on lack of follow-through behind Monday's bank bounce. Fedspeak still reflective of a tightening bias despite market expectations for a pause and quick pivot. Regulatory backdrop for big deals remains very difficult with biopharma in the crosshairs.

Mild gains today came despite some renewed concerns about economic growth following record sequential contraction in the NY Fed's Empire manufacturing survey. Headlines over the weekend highlighted some traction behind the debt ceiling negotiations and the key players are set to meet again on Tuesday. In terms of Fedspeak, there was nothing surprising in the latest batch and little that is likely to alter the calculus for a June pause.

US equities mostly lower this week, though Big Tech generated a gain for the Nasdaq and provided a notable cusion for the S&P. Economic data reflected a continued easing of inflationary pressures, though there were also some worries about how weaker data fed into recession fears. The ongoing federal debt-ceiling crisis consumed a lot of bandwidth without any concrete signs of progress; however, discussions are ongoing and there remain thoughts a deal will ultimately be found. There was also a lot of commentary on the extremely narrow market leadership offered by Big Tech.

Regional banks continue to lag while big tech finished higher on the back of Google's outperformance.

The push and pull between Fed critics and supporters remains a theme. Hard landing camp aided by inverted yield curve while soft-landing points to a tight labor market and strong Q1 earnings. April PPI numbers came in softer than expected with core PPI in line, marking the lowest annualized print since January of 2021.

In terms of specific companies, Disney with mixed takeaways as the stock hit by a miss in DTC and softer 2H margin guidance for domestic parks. Outside of earnings, Tesla CEO Elon Musk announced he's hired a new CEO for X/Twitter