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Market rally faces dark cloud of debt ceiling debate

Wall Street is keeping a close eye on debt ceiling negotiation updates ahead of the weekend. The major equity averages posted two consecutive sessions of gains, lifting the Nasdaq and S&P 500 to the best weekly performance since March.

Fed Reserve Chair Jerome Powell says interest rates may not have to climb as much as expected to keep inflation in check. Powell’s comments come on the heels of recent indicators from Fed officials that the June rate decision could point to more of a cliffhanger than initially anticipated.

In a week full of earnings from U.S. retailers that showed a pullback of discretionary consumer spending, Farfetch Limited (NYSE: FTCH) reported an increase of 8% in revenue for fiscal Q1 2023. The London-based luxury fashion retailer posted a narrower-than-expected quarterly loss and reiterated its gross merchandise volume outlook for the full-year. Shares soared above $15 a share in Friday morning trade.

Berkshire Hathaway upped its stake in Occidental Petroleum Corp. (NYSE: OXY), raising its total stake above $12 billion to over 20% of the energy producer. At Berkshire’s annual shareholder meeting, Warren Buffett made clear that the Nebraska-based conglomerate has no intention of taking control of the company. Occidental shares hovered right below $60 a share ahead of the weekend.

Video transcript

[AUDIO LOGO]

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BRAD SMITH: Welcome back, everyone. Let's check in on the latest market moves to kick this off in this trading session. Let's go to the New York Stock Exchange, where Yahoo Finance contributor Remy Blaire is standing by. Hey, Remy.

REMY BLAIRE: Good morning. Well, Wall Street has had yet another positive open this morning, and this does come on the heels of two straight sessions of gains. Given the advance that we saw in the major stock averages, the NASDAQ and S&P 500 hit their highest levels for the close for this year. As for today's session, the latest earnings reports as well as Fed speak continue to be in the spotlight.

As for market-moving stocks that we're watching here at the New York Stock Exchange, let's start out with a look at Occidental Petroleum. Now, shares of the company have advanced in New York morning trade, and this comes on the heels of news that Berkshire Hathaway has scooped up more stock of the energy company, purchasing approximately $200 million, raising its total stake to a whopping $12.7 billion. Now, Buffett's conglomerate controls over 20% of Occidental stock.

Also, another stock that we're watching this morning on the heels of the latest earnings report out from retailers is Farfetch Limited. As of this morning at the open, we saw shares pop a whopping 20%. And this means that the company's stock has come off recent lows.

The luxury online retailer reported first quarter revenue that was up 8% year-on-year, and its bottom line fell less than forecasts as consumers kept shopping, at least with the luxury retailer. Now, boosting numbers for the company, they did see an improvement in inventory in the latest quarter as well as successful brand partnerships and stronger in-store sales contributing to that strong quarterly result.

Now, it is possible that when it comes to discretionary spending, at least in the luxury space, consumers continue to spend. Very recently in terms of other earnings coming out from the luxury sector, we saw LVMH, Moet Hennessy, Louis Vuitton, and Richemont report Q1 performance that did top expectations. Here in the US as we look ahead to the end of the month, we will continue to get earnings out from retailers, including Lowe's as well as Nordstrom.

JULIE HYMAN: Thanks, Remy. Looking forward to all those numbers coming next week.