Growing hopes of a debt ceiling deal are sending stocks higher

  • McCarthy sees way to vote on debt deal next week – report
  • Wal-Mart is working on increasing annual sales and earnings presentation
  • Initial claims fall more than expected
  • The Dow Jones rose 0.34%, the Standard & Poor’s 500 0.94%, and the Nasdaq 1.51%.

(Reuters) – U.S. stocks closed higher for the second straight day on Thursday amid growing optimism that an agreement on a U.S. debt ceiling could be reached within days, with retailer Wal-Mart offering additional support after upbeat annual sales. weather forecast.

The Standard & Poor’s 500 Index (.SPX) rebounded from early declines on news that US Congressman Kevin McCarthy said a deal to raise or suspend the debt ceiling is likely in time for a House vote next week.

On Wednesday, President Joe Biden and McCarthy reiterated their goal 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 was about some pressure to ease the debt ceiling, McCarthy came out again expressing some optimism that a deal could be reached by the end of the week, and the House could vote on a bill the following week,” said Anthony Saglimben. Chief Market Strategist at Ameriprise Financial in Troy, Michigan.

The Dow Jones Industrial Average rose 115.14 points, or 0.34%, to 33,535.91 points. The S&P 500 (.SPX) rose 39.28 points, or 0.94%, to 4,198.05; The Nasdaq Composite Index (.IXIC) was up 188.27 points, or 1.51%, at 12,688.84 points.

Shares of Walmart (WMT.N) rose 1.30% to $151.47 after the retail giant reported better-than-expected first-quarter earnings and boosted its 2023 sales and earnings outlook.

The debt ceiling drew attention away from uncertainty about the Fed’s stance on interest rates.

Economic data showed that the number of Americans filing new claims for unemployment benefits fell more than expected last week, indicating that the labor market remains tight, giving the Federal Reserve more protection to continue raising interest rates.

Unemployment claims
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, May 4, 2023. REUTERS/Brendan McDiarmid

Recent data indicated some slowdown in the US economy after a series of Fed rate hikes to fight high inflation. But while the market is pricing in a rate cut by the end of the year, comments from Fed officials indicated that they are not yet ready to cut or even stop rate hikes anytime soon.

Dallas Fed President Lori Logan and Fed Governor Philip Jefferson said Thursday that the economy does not appear to be declining fast enough for the central bank to halt the cycle of rate hikes.

“If we get a debt ceiling agreement at the end of the week here and remove this overall problem, you still have the Fed meeting in June, now that’s probably a face-to-face meeting based on what some policymakers said this week, so that could be a concern, it could It’s kind of a momentum limiter in the market,” Saglimben said.

Despite another rally in the 10-year US Treasury yield, growth stocks (.IGX) advanced 1.03%, led by an 8.65% jump in Synopsys (SNPS.O) shares after its second-quarter earnings results and outlook.

Netflix Inc (NFLX.O) rose 9.22% after it said its recently launched ad-supported tier reached nearly 5 million monthly active users.

Chipmaker Micron Technology Inc (MU.O) shares gained 4.08% as it plans to invest up to 500 billion yen ($3.70 billion) in Japan for new chips over the next few years.

Take-Two Interactive Software Inc (TTWO.O) jumped 11.69% as it beat its quarterly adjusted sales estimate.

Trading volume on US exchanges reached 10.49 billion shares, compared to an average of 10.62 billion for the full session over the last 20 trading days.

Advances outnumbered losers on the New York Stock Exchange by a ratio of 1.31 to 1; On the Nasdaq, the ratio was 1.14 to 1 in favor of the advanced traders.

The S&P 500 posted 27 new 52-week highs and seven new lows. The Nasdaq index posted 88 new highs and 83 new lows.

Additional reporting by Shriyashi Sanyal in Bengaluru; Edited by Magu Samuel

Our Standards: The Thomson Reuters Trust Principles.

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