BUSINESS US stocks advance amid hopes for debt ceiling deal

BUSINESS

US stocks advance amid hopes for debt ceiling deal

Xinhua

08:12, May 27, 2023

NEW YORK, May 26 (Xinhua) -- U.S. stocks ended higher on Friday as investors grew hopeful that a potential debt ceiling deal is taking shape.

The Dow Jones Industrial Average rose 328.69 points, or 1.00 percent, to 33,093.34. The S&P 500 added 54.17 points, or 1.30 percent, to 4,205.45. The Nasdaq Composite Index increased by 277.59 points, or 2.19 percent, to 12,975.69.

Eight of the 11 primary S&P 500 sectors ended in green, with technology and consumer discretionary leading the gainers by rising 2.68 percent and 2.38 percent, respectively. Meanwhile, energy and health led the laggards by losing 0.37 percent and 0.17 percent, respectively.

U.S. stocks traded sharply higher Friday, with the frenzy surrounding artificial intelligence (AI) leading another day of gains, as hopes rose for a deal to raise the U.S. debt ceiling.

Investors are more bullish than in early December, or at least far less bearish, thanks largely to optimism around broader use of technology, and specifically AI, noted Mike Wilson, Morgan Stanley's chief U.S. equity strategist.

Meanwhile, congressional leaders and U.S. President Joe Biden were in regular communication throughout Friday. The two sides were zeroing in on a deal that would increase the U.S. debt limit for two years, according to CNBC.

"I thought we made progress yesterday. I want to make progress again today," House Speaker Kevin McCarthy told reporters Friday.

"Wall Street is starting to get nervous as we near the X-date. A U.S. default seemed unimaginable a couple of weeks ago and despite a lot of positive comments from both sides, negotiations will go down to the wire and that means the risk that it falls apart is growing," said Craig Erlam, senior market analyst at OANDA, a supplier of online multi-asset trading services.

Investors are also paying close attention to new data released on Friday, suggesting inflation rose more than expected in April. Some analysts are expecting the Federal Reserve may raise interest rates again at the next monetary policy meeting to quell high inflation.

The U.S. personal consumption expenditures (PCE) price index rose 4.4 percent for the 12 months ending April, up from a 4.2 percent increase in March, according to data issued by the Department Commerce on Friday. The closely watched core PCE index, which excludes food and energy, edged higher to 4.7 percent year over year in April from a rate of 4.6 percent in March.

On a monthly basis, PCE index and core PCE index both rose 0.4 percent in April, according to the Department of Commerce.

Federal Reserve Bank of Cleveland President Loretta Mester said she wouldn't rule out hiking interest rates again in June. "The data that came in this morning suggests we have more work to do," she said on Friday.

The Federal Open Market Committee has over 70 percent probability of raising federal fund rates by another 25 basis points in June, data from the CME FedWatch Tool indicated Friday afternoon.


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