For the immediate economic and earnings and growth outlook, it almost seems irrelevant whether regional bank stocks rally, steady or sell off more next week. Regional banks were top of mind for investors this past week, as First Republic failed , the SPDR S & P Regional Banking ETF tumbled more than 10% — twice the five-day loss in the S & P 500 Energy Index, the hardest hit S & P sector — and lenders such as PacWest Bancorp and Western Alliance Bancorp lost billions in market value. And, for all that, the S & P 500 only fell about 0.75% this week. Now the conventional wisdom on Wall Street is that regardless of how the regional bank stocks trade, it’s a given that bank lending officers are going to pull in their horns and risk management desks will grow more risk averse. In other words, credit will be harder to come by. Fed Chair Jerome Powell was asked at his press conference Wednesday about the survey of banks’ senior loan officers “because the market is focused on how much of a slowdown are we going to see in lending as lending standards climb, and banks are much more careful and restrictive in terms of issuing new loans,” said Quincy Krosby, chief global strategist at LPL Financial in Charlotte, NC. As a result, Krosby will also scan next Tuesday’s National Federation of Independent Business report for April, to see whether small business owners are having trouble getting loans or are reporting the borrowing environment is more restrictive. “Because if yes, we actually do see a more stringent lending environment, it will certainly help the Fed” to slow the economy and tamp demand. What’s more, by the start of next week there’ll be less than four weeks until the earliest date the Treasury might breach the debt limit, according to Treasury Secretary Janet Yellen’s latest letter to Congress . That will lean on the market “heavily” if it coincides “with evidence that tighter bank lending conditions are feeding into higher unemployment and greater recessionary risks,” Goldman Sachs chief global equity strategist Peter Oppenheimer said in a note late in the week. There were no signs of higher unemployment Friday, when the April unemployment rate came in at 3.4%, the lowest since 1969, and nonfarm payroll growth was far above Wall Street estimates. Debt ceiling takes focus The debt ceiling deadlock has already begun to focus investors’ hive mind. While the capital markets assumed the debate inside the Federal Reserve this week was solely about the trade-off between raising rates to fight inflation versus the pain that’s inflicted on U.S. regional banks, “Another story which the Fed would almost certainly have discussed is a potential default if the U.S. government runs out of cash to pay its bills,” said Huw Roberts, head of analytics at Quant Insight in London. “The political impasse is getting worse.” The Fed wrapped up its two-day meeting on Wednesday by boosting its benchmark fed funds rate a quarter point to a top 5.25%. With only about 30 companies in the S & P 500 reporting earnings next week (most notably Disney , post-market Wednesday), down from about 175 this week, attention instead will center on the April consumer price index that the Bureau of Labor Statistics will release next Wednesday morning. The consensus view among economists is that, excluding volatile food and energy prices, the “core” rate of inflation eased only slightly last month, to 0.3% from 0.4% in April, while the year-over-year annual increase slowed to 5.4% in April from 5.6% in March. Progress, perhaps, but still far above the Federal Reserve’s 2% inflation target. Markets in a range Friday’s stock market rally notwithstanding, Goldman Sachs sees equity markets continuing to be marked by a “fat and flat” trading range, noting that global stock markets have rallied some 17% since the October low. “The more recent troubles in the banking system generated a brief period of contagion fear but led to expectations of imminent interest rate cuts which have since faded, partially, on the back of more resilient growth data,” strategist Oppenheimer wrote. But stocks still face a host of issues, none of which are going away next week. Goldman points to the risk of a slower economy than would have otherwise prevailed in the second half as a result of fall-out from the bank crisis and tightening lending conditions that will combine to slice about 0.4% from 2023 GDP growth. What’s more, “inflation, while showing signs of moderating, remains sticky. The labor market remains tight and wage inflation is rising. The tightness of the labor market continues to be a double-edged sword, supporting consumption on the one hand but contributing to a higher-for-longer risk of inflation on the other,” in Goldman’s view. Meanwhile, the Cboe Volatility Index reading below 17 late Friday suggests a high degree of complacency in the market, a very small number of stocks are contributing the vast amount of strength to the market indexes, and “high cash returns mean that there are now reasonable alternatives (TARA) and that provides a very high bar for equities,” Goldman said. Indeed, Barclays Investment Bank said on Friday that money market funds once again attracted more than $50 billion in the most recent week, have risen for nine weeks out of the past 10, and so far this year have drawn almost $700 billion from investors. Flows into fixed income investments have totaled some $130 billion so far in 2023, Barclays said. “What was seen as a pivotal week for markets has not moved the needle much on the conundrum investors are facing,” said strategist Emmanuel Cau. “Equities are in late-cycle limbo, torn between peak rates hope and recession fear.” Week ahead calendar Monday 10 a.m. Wholesale inventories (March) 2 p.m. Fed Senior Loan Officer Opinion Survey Earnings: Viatris, Tyson Goods, Dish Network, McKesson, Skyworks Solutions, Western Digital, DaVita, Paypal Tuesday 6 a.m. NFIB Small Business Index (April) Earnings : Waters, Catalent, Air Products & Chemicals, Fox Corp., International Flavors & Fragrances, Duke Energy, Henry Schein, Jacobs Solutions, Ventas, Devon Energy, TransDigm, Akamai, Axon Enterprise, Electronic Arts, Occidental Petroleum Wednesday 8:30 a.m. CPI (April) Earnings : Celanese, Lincoln National, Disney Thursday 8:30 a.m. PPI (April) 8:30 a.m. Initial jobless claims (week ended May 6) Earnings : Tapestry, PerkinElmer, Charles River Laboratories, Steris, Gen Digital Friday 8:30 a.m. Import/export price indexes (April) 10 a.m. University of Michigan consumer sentiment index (May preliminary) — CNBC’s Hakyung Kim, Fred Imbert and Michael Bloom contributed to this report.