US STOCKS-Wall Street surges on optimism about debt ceiling talks
26/05/2023 19:07
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Biden, McCarthy close in on US debt ceiling deal
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Marvell Technology jumps on upbeat forecast
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Ford up on deal to access Tesla's charging stations
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Indexes up: S&P 500 +1.20%, Nasdaq +2.10%, Dow +0.88%
(Rewrites top paragraph, updates prices throughout, adds
graphic, investor comment)
By Noel Randewich and Shristi Achar A
May 26 (Reuters) -
Wall Street jumped on Friday following progress in
negotiations on raising the U.S. debt ceiling, 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 was set to end a
five-day losing streak, while the Nasdaq Composite Index .IXIC
jumped to its highest level since August 2022.
The Philadelphia Semiconductor Index .SOX rose 5.3%,
bringing its gain in the past two sessions to almost 13%.
Building on recent euphoria related to AI,
Marvell Technology Inc MRVL.O jumped 29% 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 1.9%, adding to its 24% gain on
Thursday following its blowout forecast.
The S&P 500 .SPX jumped 1.20% and was last at 4,201.24
points.
The Nasdaq gained 2.10% at 12,965.14 points, while the
Dow Jones Industrial Average was up 0.88% at 33,052.20 points.
Of the 11 S&P 500 sector indexes, eight rose, led by
consumer discretionary .SPLRCD , up 3.01%, followed by a 2.4%
gain in information technology .SPLRCT .
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 7.5% 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 dropped 13% after the cosmetics
retailer cut its annual operating margin forecast.
Paramount Global PARA.O added 6% after the media
conglomerate's controlling shareholder National Amusements
received a $125 million investment.
Advancing issues outnumbered falling ones within the S&P
500 .AD.SPX by a 1.9-to-one ratio.
The S&P 500 posted 16 new highs and 14 new lows; the
Nasdaq recorded 64 new highs and 90 new lows.
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Fund flows: U.S. equity sector funds Fund flows: U.S. equity
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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))