Nasdaq, S&P 500 rise amid fresh round of debt talks; Micron slides

  • Reuters
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Nasdaq, S&P 500 rise amid fresh round of debt talks; Micron slides
Credit: © Reuters

By Shreyashi Sanyal and Shristi Achar A

(Reuters) - The Nasdaq and the S&P 500 rose on Monday as markets turned to megacap stocks while awaiting updates on a fresh round of talks about raising the U.S. debt ceiling, and shares of Micron fell after China's ban on its memory chips.

President Joe Biden and House Republican Speaker Kevin McCarthy will meet for talks on Monday after their discussions almost fell apart on Friday. The fresh talks come less than two weeks before a deadline after which the Treasury warned that the federal government will struggle to pay its debts.

A default would cause chaos in financial markets and spike interest rates.

"There certainly is a fair amount of concern related to the debt ceiling, although you would not necessarily see it in the performance of the equity markets over the last couple weeks," said Matthew Palazzolo, senior investment strategist at Bernstein Private Wealth Management.  

"Investors are also looking back to prior periods where the debt ceiling debate ultimately got resolved."

The Nasdaq led gains on Wall Street, with Microsoft (NASDAQ: MSFT ) Inc, Tesla (NASDAQ: TSLA ) Inc and Alphabet (NASDAQ: GOOGL ) Inc up between 0.6% and 2.7%.

"Market expectations that the Federal Reserve is going to cut (rates) beginning this summer (is) beneficial for growth oriented technology companies," Palazzolo added.

At 12:36 p.m. ET, the Dow Jones Industrial Average was down 104.01 points, or 0.31%, at 33,322.62, the S&P 500 was up 2.98 points, or 0.07%, at 4,194.96, and the Nasdaq Composite was up 46.11 points, or 0.36%, at 12,704.01.

In a move that was perceived as ramping up trade tensions between Beijing and Washington, China barred chipmaker Micron Technology Inc (NASDAQ: MU ) from selling memory chips to key domestic industries, sending its shares down 2.4%.

Apple Inc (NASDAQ: AAPL ) slipped 0.6% after a report that Loop Capital downgraded the iPhone maker's stock to "hold" from "buy", its first rating cut in five months, according to Refinitiv data.

Dow component Chevron Corp (NYSE: CVX ) fell 0.7% as the oil major said it would buy PDC Energy Inc in a  stock-and-debt transaction for $7.6 billion.  

PacWest Bancorp rose nearly 15% after the regional lender entered into an agreement to sell a portfolio of 74 real estate construction loans to a subsidiary of Kennedy-Wilson Holdings Inc.

Investors now await key data points this week, including a reading on April personal consumption expenditure (PCE) index, considered to be the Fed's preferred inflation gauge, due on Friday. 

Minneapolis Fed President Neel Kashkari told CNBC in an interview that it was a "close call" on whether to raise rates at the Fed's June meeting or take a pause, while St. Louis Fed chief James Bullard said the central bank might have to hike rates by 50 basis points this year.

© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 11, 2023.  REUTERS/Brendan McDermid

Advancing issues outnumbered decliners by a 1.83-to-1 ratio on the NYSE and by a 1.86-to-1 ratio on the Nasdaq.

The S&P index recorded 18 new 52-week highs and nine new lows, while the Nasdaq recorded 68 new highs and 63 new lows.

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