5 Things to Know Before Markets Open

News of the day for May 23, 2023


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Debt ceiling talks will continue and Lowe’s shares fell after it cut its sales and profit outlook. Here’s what investors need to know today. 

1. Lowe’s Shares Fall After Cut to Sales and Profit Forecasts

Home improvement retailer Lowe's (LOW) cut its annual sales and profit forecasts after its earnings release missed estimates for first-quarter comparable sales. Its diminished outlook mirrors that of Home Depot and Target, other retailers with recent earnings reports showing weakening in non-essential retail spending. Shares of Lowe’s fell 2% in pre-market trading.

2. Debt Talks Continue This Week

After a 90-minute Monday meeting that was described as “productive” but not conclusive, President Joe Biden and House Speaker Kevin McCarthy reiterated that they wouldn’t allow the U.S. to default on its debt. The White House warned that the stock market could fall by 45% if the U.S. defaults. McCarthy said he would speak with Biden every day while staff negotiates, adding that a deal must be reached this week in order to have time to move it through Congress before the June 1 deadline.

3. New Home Sales Expected to Drop, PMI Coming for U.S. Manufacturing, Services

Data on new home sales that will be released at 10 a.m. ET is expected to show sales dropping to 665,000 in April, down from 683,000 in March.  Investors will also get a better look at the health of the U.S. manufacturing and service sectors with the 9:45 a.m. ET release of the Purchasing Managers' Index. A PMI above 50 represents an expansion over the previous month.

4. Activist Investor Urges Yelp to Explore Sale

Activist investor TCS Capital Management, which owns 4% of the shares of  service-recommendation website Yelp (YELP) be purchased by a technology or media company or private-equity buyer for $70 a share. Shares of Yelp traded at around $37 in pre-market trading, up 14%.

5. PacWest Shares Move Higher After Real Estate Loan Sale

Shares of PacWest Bancorp (PACW) moved higher after the troubled bank announced it had sold $2.6 billion of real estate construction loans in an effort to improve its balance sheet. PacWest moved up nearly 20% on the news, while Western Alliance Bancorp (WAL) rose 10%, Comerica Inc (CMA) added 3.5%, Zions Bancorporation (ZION) gained almost 5%.and the KBW Regional Banking Index moved 3% higher.

Article Sources
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  1. Reuters. “Lowe's cuts annual sales, profit forecasts as demand wavers.”

  2. Wall Street Journal. “Biden, McCarthy Hold ‘Productive’ Meeting but No Debt-Ceiling Deal Yet.”

  3. MarketWatch. “U.S. Economic Calendar.”

  4. Wall Street Journal. “Activist Investor Calls on Yelp to Explore Sale.”

  5. Reuters. “PacWest shares jump after $2.6 bln real estate loan sale.”

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