Investing.com — The S&P 500 surged on Friday as negotiators in Washington moved closer to agreeing on the debt ceiling needed to prevent the United States from defaulting on debt.
The was up 1.3%, the 1% up, or 330 points, the 2% added.
Republican and White House negotiators appear closer than ever to a breakthrough in debt ceiling talks after reaching a potential deal to raise the debt ceiling and cap federal spending for two years until in 2024, according to the media.
“[W]We think the odds are highest that a deal will be announced late Friday (May 26) or Saturday (May 27),” Goldman Sachs said. “If so, that would likely allow for a vote in the House late Tuesday (May 30) or Wednesday (May 31).”
Spending caps under the emerging deal do not appear likely “to materially affect the macroeconomic outlook”, he added.
Growing optimism of a breakthrough on the debt ceiling talks bolstered investor sentiment towards stocks, although stronger data on consumer spending and inflation tipped the balance. in favor of a rate hike in June.
The month rose 0.8% in April, beating economists’ estimates of 0.4%, while it rose 0.4% and was also warmer than expected.
“Pricing pressures and stronger-than-expected consumer spending will make it increasingly difficult for the Fed to pause in June,” Sitfel said in a note.
About 70% of traders now expect the Fed to hike rates in June, up from just 15% last week, according to Investing.com.
Fed rate watch tool.
rose in anticipation of further increases, but that did not dampen optimism in the interest rate sectors of the market, including technology and consumer discretionary.
Meta Platforms Inc (NASDAQ:), Apple Inc (NASDAQ:) and Microsoft (NASDAQ:) pushed big tech up, while Amazon.com Inc (NASDAQ:) and Tesla Inc (NASDAQ:) were the biggest winners in consumer discretionary.
Tesla Inc (NASDAQ:) gained 5% after the electric vehicle maker announced a partnership with Ford Motor Company (NYSE:) that would give the latter access to its Superchargers in the US and Canada.
Technology was also helped by a second day of strong gains in semiconductor stocks. NVIDIA Corporation (NASDAQ:) added to its one-day rally earlier, while Marvell Technology Group Ltd (NASDAQ:) jumped 30% after estimating that artificial intelligence revenue growth would at least double in fiscal year 2024.
Gap Inc (NYSE:) was also a big gainer on the earnings front, rallying 13% after its quarterly report, released on Thursday, showed improving margins.
“[W]We believe management execution within the main Old Navy banner is beginning to improve with better assortments and improved market share gains in women and babies,” Goldman Sachs said in a note.
Ulta Beauty (NASDAQ:), meanwhile, fell 13% after the beauty retailer’s reduction in its margin outlook offset the first quarter that beat both top and bottom results.
Still, falling equities could prove painful in the short term but beneficial in the long run, UBS said, believing that Ulta Beauty “will resume an upward trajectory over the course of the year…as the market sees signs that it can sustain its EPS algorithm in double digits for an extended period.”
Separately, JPMorgan Chase & Co (NYSE:) gained 1% as the Wall Street bank reportedly cut about 500 jobs this week, CNBC reported, citing unknown sources.
