U.S. stocks were mostly higher on Thursday, with gains in Nvidia Corp. helping lift the Nasdaq, but the Dow was struggling to halt a four-session slide as talks over the US debt ceiling dragged on in Congress.
Price action
-
The Dow DJIA
the decline was flat near 32,805, after briefly turning positive. -
The S&P 500 SPX
rose 43 points, or 1.1%, to 4,159. -
The Nasdaq Composite COMP
rose 242 points, or 2%, to 12,728.
The Dow fell for a fourth straight session on Wednesday as concerns over the debt ceiling continued to hang over the market.
What is driving the markets
Fears about the looming US debt ceiling deadline were offset on Thursday by enthusiasm about the prospects for artificial intelligence technology after results from chipmaker Nvidia late on Wednesday, leading to a totally different performance for the Nasdaq and the Dow. Nvidia NVDA
shares rose 25%.
“Today it’s all about the Nasdaq, which was briefly up nearly 2% on Nvidia and its earnings report,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management.
“This is helping to elevate the semiconductor space, fueling activity on the Nasdaq,” he told MarketWatch. “Optimism is bleeding into other big tech-related companies.”
Depending on where Nvidia ends Thursday’s session, the chipmaker could add more than $200 billion to its market capitalization, according to Dow Jones Market Data. It was also about to join a small club of companies worth more than a trillion dollars, while its earnings also helped lift the shares of related companies.
Shares of Advanced Micro Devices Inc.
AMD
increased by 9.9%, while those of Microsoft Corp. they increased by 3.7%.
As the Nasdaq jumped, the Dow turned positive briefly in afternoon trade, but regained earlier ground as debt ceiling talks loomed over markets.
Top Republicans in the House and the White House sounded optimistic Thursday about the debt ceiling talks in Washington. with President Biden saying negotiations were “moving forward.”
Falling crude oil prices weighed on shares of energy companies and dragged the Dow further lower. West Texas Intermediate crude for July delivery CL00 CL.1 CLN23 fell 2.9% to settle at $72.20 a barrel.
Ructions at the short end of the Treasury market, where some 1-month bills yield BX:TUBMUSD01Y
broke above 7%: It illustrates traders’ anxiety that, unless Congress can reach a deal to extend the debt ceiling, the US government could technically default in early June.
“People are nervous and a little worried about whether the government is going to miss an interest payment,” Pavlik said, adding that he expected the talks to run past the June 1 deadline, unnerving markets , but then a resolution is found. ..
Ratings agency Fitch said late Wednesday it was putting the U.S.’s AAA credit rating on watch for a possible downgrade given what it called debt ceiling “brinkmanship.”
“Fitch Ratings’ decision to place the US credit rating at risk of downgrade is a necessary step and will likely cause limited market tension,” said Edward Moya, senior market analyst for the Americas at Oanda, in comments sent by email.
Investors also looked at weekly U.S. jobless claims data, which hit a seasonally adjusted 229,000 last week, according to data released by the Labor Department. GDP data also showed the US grew at a slightly faster but still tepid 1.3% annual rate in the first quarter, updated figures show, as high inflation and rising interest rates weighed on the economy.
Several Fed officials were speaking on Thursday, with Boston Fed President Susan Collins saying signs of waning inflation could justify the central bank soon halting its rate hikes. Richmond Fed President Tom Barkin said the US economy is experiencing a slowdown in demand.
Companies in focus
-
Palo Alto Networks Inc.
PANW,
Applied Materials Inc.
HUGE
i Synopsys Inc.
SNPS
stocks rose, benefiting from AI-inspired optimism. -
Snowflake Inc.
SNOW
fell after the data software company beat expectations with its latest results but cut its full-year outlook. -
American Eagle Outfitters Inc.
AEO
fell after the clothing chain forecast a “low-single-digit” sales decline for the second quarter, amid “ongoing macro challenges” that have led to subdued apparel demand. -
Best Buy Co. Inc.
ABY
were higher after the electronics retailer reported first-quarter fiscal profit that beat expectations, but fell a bit shy on revenue, while maintaining its full-year outlook. -
Dollar Tree Inc.
DLTR
shares fell after the discount retailer missed first-quarter fiscal profit expectations and cut its full-year outlook as a sharp contraction and a shift in consumables buying patterns weigh in the results. -
Exxon Mobil Corp.
XOM
fell, dragged down by the drop in oil prices.
––Additional reporting by Jamie Chisholm
