Notes from the markets

  • Stocks mostly up, bond prices down on Monday
  • Markets eye debt-ceiling progress, Fed policy
  • Heavy trading in GPN calls and puts

With White House and congressional leaders not scheduled to discuss the debt-ceiling impasse until after the markets closed on Monday, it’s small wonder trading was relatively low key—and mixed—at the outset of the week.

The Russell 2000 (RUT) rallied more than 1% and the Nasdaq 100 (NDX) posted a modest gain, but the Dow Jones Industrial Average (DJIA) lost ground and the S&P 500 (SPX) was flat as traders awaited news from Washington and digested reports that the Fed may not be done raising interest rates.1

Communication services and real estate were the SPX’s strongest sectors, while consumer staples and materials trailed the field. Bond prices mostly retreated as yields climbed, with the 10-year T-note yield closing above 3.7% for the first time since March 9.

LiveAction hits: Global Payments (GPN) rallied more than 1.5% and had Monday’s heaviest options volume in early trading:

Chart 1: LiveAction scan: Unusual options volume, 5/22/23. Unusual options activity. GPN options volume 35 times avg.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)

Overall, GPN’s options volume was more than 35 times average, with call volume around 33 times average and put volume 41 times average. The big trades were both in August monthly options: 13,100 of the $115 calls (vs. open interest of 13,400) and 12,000 of the $105 puts (vs. open interest of 12,300).

Market Mover Update: Impinj (PI) rallied nearly 2% on Monday, extending its gain since May 5 to more than 12% (see “The volatility challenge”). Krystal Biotech (KRYS) jumped more than 22% to close at an all-time high of $117.53 after news the Food and Drug Administration had approved its treatment for a rare skin disease.

From Morgan Stanley: As traders continue to gauge the possibility of a recession, Morgan Stanley & Co. analysts break down the economic data that may determine whether we get a “soft landing”—and how that may play into the Fed’s timeline for cutting interest rates.2

Today’s numbers include (all times ET): PMI Composite flash (9:45 a.m.), New Home Sales (10 a.m.).

Today’s earnings include: AutoZone (AZO), BJ’S Wholesale Club (BJ), Dick’s Sporting Goods (DKS), Lowe’s (LOW), Agilent (A), Intuit (INTU), Palo Alto Networks (PANW), Toll Brothers (TOL), Urban Outfitters (URBN).


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1 Reuters. Bullard: Rates may still need to rise another half-point this year. 5/22/23.
2 Is a Soft Landing for the U.S. still possible?  5/5/23.

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