Wall Street indices end sharply higher on debt ceiling optimism

May 26 (Reuters) – U.S. stocks ended sharply higher on Friday as talks on raising the U.S. debt ceiling progressed, while chip stocks jumped for a second straight day on optimism about the artificial intelligence.

After several rounds of talks, US President Joe Biden and Congressional Republican Kevin McCarthy appeared close to reaching a deal to raise the government’s debt limit to $31.4 trillion for two years, while capping debt. spending on most items, a US official told Reuters.

The Dow Jones Industrial Average (.DJI) ended a five-day losing streak, while the Nasdaq Composite Index (.IXIC) and S&P 500 (.SPX) closed at their highest levels since August 2022 , with the S&P 500 above 4,200 points.

The Philadelphia Semiconductor Index (.SOX) jumped 6.3%, taking its gain over the past two sessions to more than 13%. Building on recent AI-related euphoria, Marvell Technology Inc (MRVL.O) jumped 32% after the chipmaker announced it would double its annual AI-related revenue.

Investors were watching the debt ceiling talks closely as Biden and McCarthy still appeared to be at odds on several issues ahead of the long weekend, with the U.S. stock market closed on Monday for the Memorial Day holiday.

“All the signs are that a deal is done and this rally is going, but if we go through the weekend and we don’t have a deal or it somehow falls apart another, so we’re going to wake up Tuesday morning to pretty big losses,” said Scott Ladner, chief investment officer at Horizon Investments in Charlotte, North Carolina.

Shares of Nvidia Corp (NVDA.O) soared 2.5%, adding to its 24% gain on Thursday after its blowout forecast and taking its market value to around $960 billion, according to Refinitiv.

The S&P 500 climbed 1.30% to end at 4,205.45 points.

The Nasdaq gained 2.19% to 12,975.69 points, while the Dow Jones Industrial Average rose 1.00% to 33,093.34 points.

Of the 11 sector indices in the S&P 500, eight rose, led by information technology (.SPLRCT), up 2.68%, followed by a 2.38% gain in consumer discretionary (.SPLRCT). SPLRCD).

Volume on U.S. exchanges was relatively light, with 9.8 billion shares traded, compared to an average of 10.5 billion shares over the previous 20 sessions.

For the week, the S&P 500 rose 0.3%, the Dow Jones fell 1.0% and the Nasdaq jumped 2.5%.

Data showed that consumer spending in the United States rose more than expected in April and inflation accelerated, which could prompt the Federal Reserve to raise interest rates again next month.

“We still have inflation, we still have higher interest rates and that will continue to be an overhang for the market until the Federal Reserve stays on the sidelines,” said David Sadkin, chairman. of Bel Air Investment Advisors.

Traders now see a 60% chance of a 25 basis point hike by the Fed at its June policy meeting, up from around 40% before the data, according to CME tool FedWatch.

Ford Motor Co (FN) jumped 6.2% after the automaker signed a deal giving customers access to more than 12,000 Tesla Inc (TSLA.O) superchargers in North America in early 2024. Tesla jumped 4.7%.

Ulta Beauty Inc (ULTA.O) fell 13.4% after the cosmetics retailer cut its annual operating margin forecast.

Paramount Global (PARA.O) rose 5.9% after the media conglomerate’s controlling shareholder, National Amusements, received a $125 million investment.

Advancing issues outnumbered declining ones in the S&P 500 (.AD.SPX) by a ratio of 2.2 to one.

The S&P 500 posted 17 new highs and 15 new lows; the Nasdaq recorded 77 new highs and 115 new lows.

Reporting by Shreyashi Sanyal and Shristi Achar A in Bengaluru and Noel Randewich in Oakland, Claifornia; Editing by Maju Samuel, Vinay Dwivedi and Richard Chang

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