US stocks extend gains amid optimism on debt ceiling talks

19 May 2023 09:06am
Image for illustrative purposes only. - FILE PIX
Image for illustrative purposes only. - FILE PIX
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NEW YORK, US - US stocks ended higher on Thursday as hope grew for a US debt ceiling deal, reported Xinhua.

The Dow Jones Industrial Average rose 115.14 points, or 0.34 percent, to 33,535.91. The S&P 500 added 39.28 points, or 0.94 per cent, to 4,198.05. The Nasdaq Composite Index increased 188.27 points, or 1.51 per cent, to 12,688.84.

Seven of the 11 primary S&P 500 sectors ended in green, with technology and communication services leading the gainers by rising 2.06 per cent and 1.79 per cent, respectively. Meanwhile, real estate and consumer staples led the laggards by dropping 0.68 per cent and 0.44 per cent, respectively.

US stocks traded higher with hopes for a debt ceiling deal. Investors grew more confident that US President Joe Biden and congressional leaders appear to be on the same page about reaching a compromise to avert a catastrophic US debt default.

House Speaker Kevin McCarthy said Thursday he's optimistic that both sides could reach a debt ceiling deal in time for a House of Representatives vote as early as next week.

"US stocks are rising as the biggest risk on Wall Street's table appears to be going away," said Edward Moya, senior market analyst at OANDA, a supplier of online multi-asset trading services.

Walmart also provided a boost for market sentiment, with its strong first quarter report beating forecasts. The retail giant also raised its full-year profit outlook.

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Investors are also digesting a flurry of economic data, as well as the relatively hawkish statement from a central banker.

The US Department of Labour reported Thursday that new jobless claims fell to 242,000 in the week ending May 13, compared with economists' expectation of 254,000 and the previous week's 264,000.

The National Association of Realtors said Thursday that existing home sales fell 3.4 per cent in April from March to a seasonally adjusted annual rate of 4.28 million units.

"The combination of job gains, limited inventory and fluctuating mortgage rates over the last several months have created an environment of push-pull housing demand," said NAR Chief Economist Lawrence Yun.

Meanwhile, Dallas Federal Reserve President Lorie Logan said Thursday that the economic data so far don't justify skipping a rate hike at the central bank's June meeting.

Bullish investors seem to view the potential pause as a stock-buying opportunity, based on the belief that the Fed will soon begin cutting rates, which would support higher equity valuations, said Morgan Stanley Wealth Management CIO Lisa Shalett.

"However, recent signs of persistent inflation suggest the Fed may instead keep rates elevated for longer. What's more, a look at past rate-hiking cycles suggests that more economic and market pain may be in store," said Shalett. - BERNAMA-XINHUA