MARKET WRAPS

Watch For:

Monthly/Quarterly House Price Index;S&P CoreLogic Case-Shiller Indices; Consumer Confidence Index; Texas Manufacturing Outlook Survey; Canada Balance of Payments; HP earnings

Today's Headlines/Must Reads

- Biden, McCarthy's Debt-Ceiling Deal Faces Crucial First Test in House

- China's Fading Recovery Reveals Deeper Economic Struggles

- Why Microsoft's $75 Billion Bid for Activision Hinges on Call of Duty

- The AI Boom Runs on Chips, but It Can't Get Enough

- Company Insiders Made Billions Before SPAC Bust

Follow WSJ markets coverage here .

Opening Call:

Stocks were looking to start the holiday-shortened week at fresh 10-month highs as traders welcomed a deal to extend the government debt-ceiling and as optimism over AI-derived earnings continued to underpin sentiment.

"Volumes should return to normal today...so we should get a much better read on market trends where optimism over a U.S. debt ceiling agreement may continue to support risk assets for the early part of the week," SPI Asset Management said.

Some analysts were more cautious, noting Congress must still pass the deal and this uncertainty may keep a lid on ebullience.

"...further developments will be keenly awaited this week as the political saga continues to unfold, and until a definitive agreement is reached, markets are likely to resume something of a holding pattern," Interactive Investor said.

Still, equity bulls will be hoping the S&P 500 can accelerate after finally managing on Friday to close above the 4,200 mark that had proved a stubborn top to a multi-month trading range.

Support could come from big tech stocks as investors look for more AI exposure and valuations are helped by retreating bond yields as debt ceiling angst eases, according to analysts.

Stock Gainers

Ford stock rose 3% after it was upgraded to buy from hold at Jefferies. Read more here .

Nvidia shares rose 3% ahead of the open. It recently bolstered its earnings estimates on artificial-intelligence demand and announced a flurry of new products over the weekend. AI excitement also bolstered shares of companies including Palantir Technologies, Advanced Micro Devices and https://urldefense.com/v3/__http://C3.ai__;!!F0Stn7g!D6FxZCyvj0asBpvI6F35JOsRXYF8OL6NFSakRlkSyNiMkYDAdKBNUy7HVgyOY-UE-8sgjkG6jtT1Ggm_WdoB9nYbBZRmEnHrt9I_LfVQojQ$ .

Stock Decliners

Shares of Newell Brands fell more than 3% in the extended session on Friday after it said it was embarking on a restructuring and savings plan intended to "streamline" its North American distribution network.

Forex:

The dollar hit a 10-week high against a basket of currencies as agreement on the debt ceiling has allowed markets to focus on Friday's jobs data and prospects of the Federal Reserve raising rates further, MUFG said.

"Assuming that U.S. politicians don't surprisingly reject the deal, market attention should switch back to the health of the U.S. labor market in the week ahead," MUFG said.

Another strong jobs report would reinforce expectations for a rate increase in July and strengthen the dollar in the near term, it added.

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U.K. money markets are pricing in 100 basis points of interest-rate rises from the Bank of England by November and this should support sterling in the near-term, ING said.

"Our team's view is that such an amount of tightening is highly unlikely and that the usually reticent BOE may try and verbally push back against it," ING said.

Upcoming U.K. labor market and inflation data will be key in determining whether the market reins in its aggressive rate expectations but until then EUR/GBP could fall further while GBP/USD will better resist a stronger dollar, ING added.

Read Inflation Data Will Be Key for European Rates Markets Pre-ECB Meeting

Energy:

Oil prices dipped in European trading on concerns that Joe Biden's debt-ceiling deal could struggle to win congressional support, while focus was also on the upcoming OPEC meeting.

OPEC "will want more evidence of the impact of its lower output quotas before making further changes" despite recent hints from Saudi Arabia indicating they are considering another output cut, ANZ said.

Metals:

Base metals and gold were weaker with mixed the macroeconomic signals weighing on sentiment.

"U.S. bond markets are pricing another 25 basis point hike by the end of July, a hawkish shift that's good for the dollar but bad for risk assets and commodity prices," Peak Trading Research said.

It added that markets will be watching how debt ceiling talks progress as well as Friday's job numbers and their effect on the dollar.

Copper

Copper prices have fallen 11% in the last four weeks and 15% from its year-to-date high, but Morgan Stanley said there are some "green shoots."

Chinese property completions are up 18% YTD and 5% higher than 2019 levels, while grid spend is up 10% YTD and electric-vehicle sales are up 44%.

"On top, although refined copper imports are down 11% YTD, copper ore and concentrate imports are up 6%, refined production is up 14%, and semis output is up 12%. If we add production to net imports, we imply China's 'apparent consumption' ex inventories to be up 9%," Morgan Stanley said.

TODAY'S TOP HEADLINES

Why Microsoft's $75 Billion Bid for Activision Blizzard Hinges on Call of Duty

The buttoned-up regulators behind competition policy around the world share something in common with millions of the world's most hard-core gamers: an obsession with Call of Duty.

The videogame franchise, arguably the most successful ever, is at the center of the debate over whether Microsoft's planned $75 billion acquisition of Call of Duty owner Activision Blizzard could give it an unfair edge to dominate the videogaming industry.

The AI Boom Runs on Chips, but It Can't Get Enough

The artificial-intelligence revolution is being likened by Google's chief executive to humanity's harnessing of fire. Now if only the industry could secure the digital kindling to fuel it.

A shortage of the kind of advanced chips that are the lifeblood of new generative AI systems has set off a race to lock down computing power and find workarounds. The graphics chips, or GPUs, used for AI are almost all made by Nvidia. But the boom in demand for them has far outpaced supply with the viral success of ChatGPT, a chatbot that is able to respond to questions in humanlike ways.

How AI Is Catapulting Nvidia Toward the $1 Trillion Club

The business that started 30 years ago with a meeting at a Denny's has become the semiconductor company at the heart of the artificial-intelligence revolution, putting it on the cusp of becoming the first $1 trillion chip company.

Nvidia's shares soared more than 24% on Thursday to an all-time high after it said the AI boom is translating into record sales, fueling excitement that the new era in computing is kicking in faster than previously thought.

China's C919 Takes Maiden Commercial Flight-and First Bite From Boeing

SINGAPORE-After a 16-year development program plagued by delays, China's homegrown C919 passenger jet made its long-awaited maiden commercial flight Sunday, marking a small but symbolic first challenge to Boeing and Airbus in one of their most important markets.

The China Eastern Airlines flight left Shanghai for Beijing about 10 minutes early. More than 10,000 people vied for the 30 seats on sale to the public, with officials and journalists taking up the rest, state media reported. Video footage showed passengers holding a small celebration on the flight, singing "Ode to the Motherland," one of China's best-known patriotic songs.

Wall Street's Next Big Play Is Garbage

The green push by the U.S. and state governments is turning trash into treasure and boosting the firms that handle America's garbage.

Shares of the biggest players in the U.S. trash business, Waste Management and Republic Services, have traded at record highs since President Biden signed the climate, tax and healthcare bill in August. A recent decline notwithstanding, the stocks are popular picks on Wall Street to ride the sustainability boom higher.

Disney's Orlando Campus Cancellation a Blow to Neighboring Projects

Walt Disney's decision to scrap a proposed $900 million office park in Orlando, Fla., creates a 60-acre hole inside an 11,000-acre master planned community, clouding the near-term future of many other real-estate projects already under way there.

The company cited changing business conditions and new leadership when it announced this month that it wasn't proceeding with plans for the office space or the relocation of 2,000 employees from California.

Biden and McCarthy's Debt-Ceiling Deal Faces Crucial First Test in House

WASHINGTON-Lawmakers returning to Washington Tuesday will face intense pressure from leaders on Capitol Hill and the White House to support the debt-ceiling bill and overcome opposition on both the left and right.

For now, President Biden and House Speaker Kevin McCarthy appear on track to gain enough bipartisan support to suspend the debt limit, but the measure could still run into procedural obstacles, complicating the race to avoid an unprecedented default.

China's Fading Recovery Reveals Deeper Economic Struggles

China's era of rapid growth is over. Its recovery from zero-Covid is stalling. And now the country is facing deep, structural problems in its economy.

The outlook was better just a few months ago, after Beijing lifted its draconian zero-Covid controls, setting off a flurry of spending as people ate out and splurged on travel.

Company Insiders Made Billions Before SPAC Bust

The SPAC boom cost investors billions. Insiders in the companies that went public were on the other side of the trade.

Executives and early investors in companies that went public via SPACs sold shares worth $22 billion through well-timed trades, profiting before share prices collapsed.

These Bank Alternatives Can Keep Cash Rolling In

Like banks, nonbank investment giants are also subject to funding worries-just in different forms, and not to the same degree. That is a big reason these firms might continue to outperform their deposit-taking peers.

Alternative-asset managers of private-equity and private-debt funds such as Apollo Global Management, Blackstone and KKR & Co. appear poised to capitalize on recent disruptions in banking. Private credit-backed buyouts jumped last year, and some managers have recently said they are looking at picking up the lending slack from regional banks.

Why Are Markets So Calm? It's Revenge of the Quant Funds

The U.S. stock market is surprisingly calm right now, especially in the face of the debt-ceiling fight. A key reason: a growing divide between mainstream investors, who have largely been sitting out the 2023 stock rally, and the machines whose buying has been driving it.

Only days remain until the U.S. blows past its debt-ceiling deadline. On Saturday, President Biden and Republican House Speaker Kevin McCarthy reached a tentative agreement to prevent a destabilizing default. But passage of the plan, which could face some opposition in the House or Senate, isn't yet assured and procedural hurdles could delay final legislation even if they don't scupper it.

Wall Street Dreads Biden-Trump Rematch

On a farm in upstate New York last weekend, Wall Street types groused about the coming presidential election in between bites of roast pig.

Billionaire money manager Mario Gabelli and banker Ralph Schlosstein were among the guests at former Honeywell Chief Executive David Cote's Carnivore's Ball-a celebration of all things meat-that featured lively discussions of potential business-friendly candidates who could shake up the 2024 race. A few meat-lovers spent the evening urging Ray McGuire, the Lazard president and former New York City mayoral candidate, to run.

China Rebuffs Pentagon Chief, Blunting Push for Rapprochement

WASHINGTON-China has rebuffed a U.S. request for a meeting between their defense chiefs on the sidelines of an annual security forum in Singapore this weekend, the Pentagon said Monday, showing the limits of a tentative rapprochement between the two rival powers.

The decision by China formally to inform the Pentagon shuts the door for now on a meeting between Defense Secretary Lloyd Austin and Li Shangfu, China's new defense minister, which the U.S. had proposed on the sidelines of the annual Shangri-La Dialogue security forum.

DeSantis, Trump and Other 2024 GOP Campaigns Take Notice of Moms for Liberty

NORTH CHARLESTON, S.C.-In recent weeks, Tara Wood has introduced Florida Gov. Ron DeSantis at a gathering of conservative activists, brought people to South Carolina Sen. Tim Scott's campaign launch and is talking to the Trump campaign about meeting with the former president.

Wood is president of the Charleston County, S.C., chapter of Moms for Liberty, a nationwide organization that has become an influential force in the GOP presidential primary. The group, which didn't exist during the 2020 race, has become the loudest voice advocating for greater parental involvement in schools. Members are helping shape a new education platform for the Republican Party in 2024.

Write to paul.larkins@dowjones.com TODAY IN CANADA

Earnings:

Canopy Growth 4Q

Coveo Solutions 4Q

Economic Calendar (ET):

0830 1Q Balance of Payments

Expected Major Events for Tuesday

00:30/JPN: Apr Detailed Import & Export Statistics

08:00/ITA: Apr PPI

08:30/UK: Apr Capital issuance statistics

09:00/ITA: Mar Industrial turnover

12:30/CAN: 1Q Balance of Payments

13:00/US: 1Q U.S. Quarterly House Price Index

13:00/US: Mar U.S. Monthly House Price Index

13:00/US: Mar S&P CoreLogic Case-Shiller Indices

14:00/US: May Consumer Confidence Index

14:30/US: May Texas Manufacturing Outlook Survey

23:50/JPN: Apr Preliminary Retail Sales

23:50/JPN: Apr Preliminary Industrial Production

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Tuesday

Ambarella Inc (AMBA) is expected to report $-0.86 for 1Q.

Arrow Financial (AROW) is expected to report $0.66 for 1Q.

Athenex Inc (ATNXQ) is expected to report for 1Q.

BQE Water Inc (BQE.V) is expected to report for 1Q.

Box Inc (BOX) is expected to report $-0.03 for 1Q.

California First Leasing Corp (CFNB) is expected to report for 3Q.

Canopy Growth Corp (CGC,WEED.T) is expected to report $-0.21 for 4Q.

Crossroads Impact Corp (CRSS) is expected to report for 1Q.

Drive Shack Inc (DSHK) is expected to report $-0.06 for 1Q.

FTI Consulting (FCN) is expected to report $1.65 for 4Q.

HP Inc (HPQ) is expected to report $0.56 for 2Q.

Hewlett Packard Enterprise Co (HPE) is expected to report $0.29 for 2Q.

Nicholas Financial (NICK) is expected to report for 4Q.

Rubius Therapeutics Inc (RUBY) is expected to report $-0.50 for 1Q.

Skyline Champion Corp (SKY) is expected to report $0.94 for 4Q.

Sportsman's Warehouse Holdings Inc (SPWH) is expected to report $-0.37 for 1Q.

TESSCO Technologies Inc (TESS) is expected to report for 4Q.

Transphorm Inc (TGAN) is expected to report for 4Q.

U-Haul Holding Co (UHAL) is expected to report for 4Q.

iMedia Brands Inc (IMBI) is expected to report for 1Q.

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ANALYST RATINGS ACTIONS

Annexon Cut to Neutral From Buy by B of A Securities

Centerspace Cut to Market Perform From Underperform by Raymond James

Dollar General Raised to Positive From Mixed by OTR Global

eFFECTOR Therapeutics Raised to Buy From Hold by Stifel

Equity Residential Cut to Underperform From Market Perform by Raymond James

Guardant Health Raised to Buy From Neutral by Citigroup

Hamilton Lane Raised to Outperform From Perform by Oppenheimer

Hibbett Cut to Sell From Hold by William Blair

Hibbett Cut to Sell From Hold by Williams Trading

MongoDB Cut to Sell From Neutral by Guggenheim

New Relic Raised to Outperform From Sector Perform by RBC Capital

Paramount Global Raised to Hold From Sell by Loop Capital

Pinnacle West Capital Raised to Neutral From Underperform by B of A Securities

RingCentral Raised to Buy From Hold by Needham

Snowflake Cut to Peer Perform From Outperform by Wolfe Research

Terran Orbital Cut to Underperform From Buy by B of A Securities

UWM Holdings Raised to Buy From Hold by Jefferies

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

May 30, 2023 06:14 ET (10:14 GMT)

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