U.S. stocks hover near highest levels of 2023 as debt-ceiling talks continue

What is driving the markets

President Joe Biden and House Speaker Kevin McCarthy, R-Calif., were scheduled to meet Monday at 5:30 p.m. ET at the White House. The Treasury Department has warned that failing to raise the debt limit could trigger a federal default as early as June 1, or what is known as the so-called X-date.

I will see: Debt ceiling talks: While Biden and McCarthy plan to meet today, analysts say a deal is needed by Friday

“The debt ceiling is at the forefront of the market’s thinking, given the proximity to the X date,” said Jack McIntyre, portfolio manager at Brandywine Global Investment Management in Philadelphia, which oversaw $55 billion as of 31 March. “There are probably things that are non-negotiables and negotiables in negotiations, and knowing how most of these things go, it’s probably going to be the last second or minute that they come to an agreement because nobody wants to be seen as giving in.”

By phone, McIntyre said “we’re going to get some volatility before we come to any conclusions,” and Treasurys look more attractive than stocks right now.

Some investors remain wary of the tech-driven nature of the rally, even as bulls welcome the S&P 500’s SPX,
+0.02%
go above 4,200, a level it surpassed on Monday.

Reads: Are Megacap’s tech stocks out of control? Analysts say Big Tech still has the power to extend the rally and weather an economic storm.

Not having a broad group of stocks participating in a rally is “a bad sign for the duration of a bull market,” said Phil Toews, CEO of Toews Corp. in New York, which manages $1.2 billion in assets.

Also, “we think this bullish attitude by investors about the debt ceiling issue is a potentially big mistake,” Toews said by phone. “The U.S. doesn’t have to default to create market chaos. With potentially nine days to X date, we think the market is underreacting. People should be watching the trades very carefully right now.” .

There were no major U.S. economic releases on Monday, but Federal Reserve officials offered new comments.

In a CNBC interviewMinneapolis Fed President Neel Kashkari said “right now, it’s a close call between lifting in June or jumping.”

“The important thing for me is not to signal that we’re done. If we were to skip June, that doesn’t mean we’re done with our tightening cycle,” said Kashkari, a voting member this year of the Federal Committee of the Open Market that establishes the rates.

Meanwhile, the president of the Fed of St. Louis Governor James Bullard said Monday he would like to see two more quarter-percentage-point interest rate hikes this year.

Companies in focus

• China’s government told users of computer equipment considered sensitive to stop buying products from the largest U.S. memory chip maker. Micron Technology Inc.
  EN
  -2.85%.
  Shares fell 3%.

• Shares of Meta Platforms Inc.
  GOAL,
  +1.09%
  gained 1.5%, erasing premarket weakness seen after the social media giant was fined 1.2 billion euros ($1.3 billion) by Ireland’s Data Protection Commission for accusations of violating the rules of the European Commission on data protection.

• Chevron Corp.
  CVX,
  -1.80%
  announced a deal Monday to buy a Colorado-based oil and gas producer PDC Energy Inc.
  PDCE,
  +7.22%
  in an all-stock deal valued at $6.3 billion, or $7.6 billion if debt is included. PDC shares rose 8.6%, while Chevron shares fell 0.7%.

• Shares of Greenhill & Co. Inc.
  GHL,
  +116.22%
  soared 117% after Japan-based Mizuho Financial Group 8411
  -0.75%

  MFG,
  -0.68%
  announced an agreement to buy the independent investment bank in an all-cash deal valued at $550 million, including debt.

— Jamie Chisholm contributed to this article.