Stock Market News: Walmart’s forecast, debt talks, Deutsche Bank’s Epstein settlement

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 4, 2023. REUTERS/Brendan McDermid

U.S. stocks closed higher on Thursday on mounting optimism that a U.S. debt ceiling deal could be reached within days, with discount retailer Walmart Inc providing additional support after an upbeat annual sales forecast.

The benchmark S&P 500 index rebounded from early declines on news that top U.S. congressional Republican Kevin McCarthy said a deal to raise or suspend the debt ceiling could potentially be reached in time to hold a House vote next week.

On Wednesday, President Joe Biden and McCarthy reiterated their aim to strike a deal soon to raise the $31.4 trillion federal debt ceiling and agreed to talk as soon as Sunday.

"Today and yesterday it's really been about some easing pressure form the debt ceiling, McCarthy again came out expressing some optimism a deal could be formed by the end of the week, House could vote on a bill the following week," said Anthony Saglimbene, chief market strategist at Ameriprise Financial in Troy, Michigan.

A Peloton logo is pictured on a sign outside a store in the Manhattan borough of New York City, U.S., January 25, 2022. REUTERS/Carlo Allegri

The U.S. Consumer Product Safety Commission (CPSC) on Thursday approved a repair for a rear guard of Peloton Interactive Inc's recalled 'Tread+' treadmill.

The fitness equipment maker had announced a costly recall of its 'Tread+' treadmill in 2021 following the reports of multiple injuries and the death of a child in an accident.

Peloton's Tread+ is a "slat-belt" treadmill that needs a higher torque motor and ground clearance than a typical home treadmill, making them a risk for children and pets.

"The approved rear guard repair eliminates the potential for entrapment near the rear roller of the treadmill," the safety regulator said in a statement.

The 2020 Ford Explorer is displayed at the North American International Auto Show in Detroit, Michigan, U.S., January 15, 2019. REUTERS/Rebecca Cook

Ford is recalling more than 422,000 SUVs in the U.S. due to a malfunction that may prohibit the rear camera image from being displayed.

The recall covers certain Ford Explorers and Lincoln Aviators from the 2020 through 2023 model years, and 2020 through 2022 Lincoln Corsairs.

Some of the vehicles were recalled earlier this year for the same problem, but Ford’s initial solution did not work. The auto giant said it is now working with suppliers to identify the cause and develop a repair.

According to the National Highway Traffic Safety Administration, the lack of a rear camera image can cut visibility and increase the likelihood of a crash.

MARKETS

Ford recalls 422K SUVs over rearview camera issue

Ford is recalling over 422,000 SUVs including Explorers and Lincoln Aviators in the U.S. because of a rear camera malfunction that could prevent the rear camera image from displaying.

Signage for a job fair is seen on 5th Avenue after the release of the jobs report in Manhattan, New York City, U.S., September 3, 2021. REUTERS/Andrew Kelly

The number of Americans filing for unemployment benefits last week fell by the most since 2021 after fraudulent claims in Massachusetts boosted the data in previous weeks.

Figures released Thursday by the Labor Department show initial claims for the week ended May 13 decreased by 22,000 to 242,000, well above the 2019 pre-pandemic average of 218,000 claims.

Continuing claims, filed by Americans who are consecutively receiving unemployment benefits, dropped to 1.79 million for the week ended May 6, a decrease of 6,000 from the previous week. 

Some economists have warned that it's difficult to get a clear picture of what's happening in the labor market after Massachusetts state officials acknowledged they are "experiencing an increase in fraudulent claim activities" involving unemployment benefits.

ECONOMY

Jobless claims fall sharply after Massachusetts fraud inflated data

Applications for jobless benefits fell last week by the most since 2021 after unemployment fraud in Massachusetts distorted the data in previous weeks.

Dallas Federal Reserve Bank President Lorie Logan speaks at Prairie View A&M University in Prairie View, Texas, U.S., February 14, 2023. REUTERS/Ann Saphir

Dallas Federal Reserve Bank President Lorie Logan on Thursday said she's concerned that "much too high" inflation is not cooling fast enough yet to allow the Fed to pause its interest-rate hike campaign in June.

"The data in coming weeks could yet show that it is appropriate to skip a meeting," Logan said in remarks prepared for delivery to the Texas Bankers Association in San Antonio, referring to the Fed's twice-quarterly policy-setting meetings, the next of which takes place June 13-14. "As of today, though, we aren’t there yet."

Investors have been betting heavily that the Fed's quarter-point interest-rate hike in early May that brought the policy rate to a 5.00%-5.25% range will be its last.

Logan's hawkish remarks creates fresh questions over whether that stance holds. Bank sector stress so far equates to about a quarter or a half-point of policy tightening, she said on Thursday, but other aspects of financial conditions have eased since March.

Containers are seen on a shipping dock, as the global outbreak of the coronavirus disease (COVID-19) continues, in the Port of Los Angeles, California, U.S., April 16, 2020. REUTERS/Lucy Nicholson

Some U.S. importers who shifted cargo away from West Coast ports to rival gateways over fears that labor contract talks could disrupt shipments have begun bringing some of that volume back, even as those negotiations stretch into their 13th month, company supply chain executives said.

But anxiety over labor negotiations only explains part of the market share losses at West Coast container ports, including the nation's busiest at Los Angeles/Long Beach, eight importers said at the Reuters Events Supply Chain conference this week in Chicago.

That's because retailers and suppliers have been reworking distribution strategies and sending goods to the East Coast and Gulf of Mexico to position goods closer to where consumers live.

Large and small retailers have been diverting cargo away from West Coast ports since before the contract covering 22,000 dockworkers at ports stretching from California to Washington State expired on July 1, to avoid any repeat of labor disputes that in the past have stranded goods on docks or ships.

A general view of Pacific Western Bank in Huntington Beach, California, U.S., March 22, 2023. REUTERS/Mike Blake

Battered shares of PacWest Bancorp and Western Alliance Bancorp edged higher in premarket trading on Thursday as the U.S. midsize lenders looked to sustain a recent rebound booked on bets that the worst of the regional banking turmoil was over.

PacWest Bancorp, which is currently exploring strategic options, climbed 7.9% and was set to build on a 22% gain recorded for the week till Wednesday.

Shares of Western Alliance climbed 4.2%, also poised to extend their near 27% surge this week after the Phoenix-based lender reported strong deposit growth in an attempt to reassure investors of its financial health after three regional banks failed in recent months.

After a bruising selloff, U.S. regional banks have found some reprieve this week thanks to favorable brokerage actions following Western Alliance's deposit disclosure, along with hopes that Washington will reach a deal to raise the U.S. debt ceiling.

The General Electric logo is seen in a Sears store in Schaumburg, Illinois, September 8, 2014. REUTERS/Jim Young

General Electric Co said on Thursday Carolina Dybeck Happe would step down as finance chief of the industrial giant, as it prepares to complete the spin-offs of its businesses next year.

Rahul Ghai will become the CFO of GE, effective Sept. 1, while retaining his role as the finance chief of GE Aerospace, which he has held since August 2022, the company said in a statement.

A former A.P. Moller-Maersk executive, Dybeck Happe took over as GE's CFO in early 2020. She helped the company lower its debt levels and stabilize cash flow, as well as navigate the turbulence brought on by the COVID-19 pandemic.

She would continue as senior vice president of GE for a "period of time" to assist with the transition and continued work on separation of businesses, the company said.

LIFESTYLE

Walmart raises outlook after boost in grocery, e-commerce sales

Walmart raised its outlook for the year after seeing a boost in its grocery and e-commerce business. CEO Doug McMillon said consumer spending remains resilient.

Walmart, the nation's largest retailer and employer, raised it forecast after a better-than-expected second quarter. U.S. sales alone rose over 7% and total revenues topped $152 billion.

MARKETS

Why Wall Street’s spooked about debt default risk 

The chances of the U.S. defaulting on its debt are low, but experts are warning that financial markets and the economy are still facing a wall of worry as lawmakers duke it out.

Debt talks are progressing with a default unlikely but Wall Street watchers warn investors are not out of the woods by any means.