US STOCKS-Wall Street indexes end sharply higher on optimism about debt ceiling
26/05/2023 21:01
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Biden, McCarthy appear to close in on US debt ceiling deal
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Marvell Technology jumps on upbeat forecast
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Ford up rallies on deal to use Tesla's charging stations
(Updates with details on trading at market close)
By Noel Randewich and Shristi Achar A
May 26 (Reuters) -
U.S. stocks finished sharply higher on Friday as talks on
raising the U.S. debt ceiling progressed, while chip stocks
surged for a second straight day on optimism about artificial
intelligence.
After several rounds of talks, U.S. President Joe Biden and
top congressional Republican Kevin McCarthy appeared to be
nearing a deal to increase the government's $31.4 trillion debt
limit for two years, while capping spending on most items, a
U.S. official told Reuters.
The Dow Jones Industrial Average .DJI ended a five-day
losing streak, while the Nasdaq Composite Index .IXIC closed
at its highest level since August 2022.
The Philadelphia Semiconductor Index .SOX surged for a
second straight day. Building on recent euphoria related to AI,
Marvell Technology Inc MRVL.O jumped after the chipmaker said
it would double its annual revenue related to AI.
Investors were closely watching debt ceiling talks as Biden
and McCarthy still seemed at odds over several issues heading
into the long weekend, with the U.S. stock market closed on
Monday for the Memorial Day holiday.
"All the signs point to a deal getting done and this rally
being sustained, but if we get through the weekend and we don't
have a deal or it falls apart in some way, then we're going to
wake up Tuesday morning to some pretty material losses," said
Scott Ladner, chief investment officer at Horizon Investments in
Charlotte, North Carolina.
Nvidia Corp's NVDA.O stock climbed, adding to its 24% gain
on Thursday following its blowout forecast and elevating its
stock market value to around $960 billion, according to
Refinitiv.
Unofficially, the S&P 500 climbed 1.31% to end the session
at 4,205.46 points.
The Nasdaq gained 2.19% to 12,975.69 points, while Dow Jones
Industrial Average rose 1.00% to 33,093.27 points.
Data showed U.S. consumer spending increased more than
expected in April and inflation picked up, which could prompt
the Federal Reserve to raise interest rates again next month.
"We still have inflation, we still have higher interest
rates and that will continue to be an overhang for the market
until the Federal Reserve goes on the sidelines," said David
Sadkin, president at Bel Air Investment Advisors.
Traders now see a 60% chance of a 25-basis-point hike by the
Fed in its June policy meet, up from about 40% before the data,
according to the CME FedWatch tool.
Ford Motor Co F.N jumped after the automaker signed a deal
allowing customers to access more than 12,000 Tesla Inc TSLA.O
Superchargers in North America in early 2024. Tesla jumped 6.7%.
Ulta Beauty Inc ULTA.O plummeted after the cosmetics
retailer cut its annual operating margin forecast.
Paramount Global PARA.O rallied after the media
conglomerate's controlling shareholder National Amusements
received a $125 million investment.
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(Reporting by Shreyashi Sanyal and Shristi Achar A in Bengaluru
and by Noel Randewich in Oakland, Claifornia; Editing by Maju
Samuel, Vinay Dwivedi and Richard Chang)
((noel.randewich@tr.com; Twitter: @randewich))