Investing.com -- The Dow ended the week lower despite rallying on Friday as optimism grows that negotiators in Washington are closing in on a debt-ceiling agreement that is needed to prevent the U.S. from defaulting on its debt payments.
Republican and White House negotiators appear closer than ever to a breakthrough in debt-ceiling talks after narrowing on a potential deal that seeks to raise the debt limit and cap federal spending for two years through 2024, according to media reports.
The countdown to a deal is being closely watched as the latest data showed the U.S. Treasury had about $38.8 billion in cash on Thursday that it uses to pay its bills, compared with an average balance of about $500B on hand.
Should a deal be announced by late Friday or on Saturday (May 27), Goldman Sachs believes this would "likely allow a House vote late Tuesday (May 30) or Wednesday (May 31).”
The growing optimism of a breakthrough on debt-ceiling talks bolstered investor sentiment on stocks even as stronger consumer spending and inflation data tipped the scales in favor of a June rate hike.
“The stronger-than-expected showing in price pressures and consumer spending will make it increasingly more difficult for the Fed to pause in June,” Sitfel said in a note.
About 65% of traders now expect the Fed to hike rates in June, compared with just 15% last week, according to Investing.com’s
Treasury yields rose in anticipation of further hikes, but that did little to dent optimism in interest rate sectors of the market including tech and consumer discretionary.
Meta Platforms Inc (NASDAQ: META ), Apple Inc (NASDAQ: AAPL ), and Microsoft (NASDAQ: MSFT ) pushed big tech higher, while Amazon.com Inc (NASDAQ: AMZN ) and Tesla Inc (NASDAQ: TSLA ) were the biggest gainers in consumer discretionary.
Tech was also helped by a second day of strong gains in semiconductor stocks. NVIDIA Corporation (NASDAQ: NVDA ) added to its rally from a day earlier, while Marvell Technology Group Ltd (NASDAQ: MRVL ) surged 32% after estimating that revenue growth from artificial intelligence would at least double in fiscal 2024.
“[W]e believe that management execution within the core Old Navy banner is beginning to improve with better assortments and an improvement in market share gains in women’s and baby,” Goldman Sachs said in a note.
Still, the plunge in stock could prove short-term pain but long-term gain, UBS says, estimating that Ulta Beauty "will resume an upward trajectory over the course of the year…as the market sees signs that it can maintain its double-digit EPS algo for an extended period."
In other news, JPMorgan Chase & Co (NYSE: JPM ) gained 1% as the Wall Street bank reportedly cut about 500 jobs this week, CNBC reported, citing unnamed sources.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.