U.S. stocks rose on Tuesday, buoyed by a strong tech sector and hopes that lawmakers would pass the debt ceiling bill before the looming June deadline.
The tech-heavy Nasdaq Composite added 0.7%, driven by gains in computer index stocks. Wall Street’s benchmark, the S&P 500, rose 0.1%, after closing at a nine-month high on Friday.
The moves come as AI-related stocks extended their rally from the previous week, with Nvidia surpassing $1 billion in market capitalization and its shares rising 6% on Tuesday.
Nvidia has become the first chipmaker to join the billion-dollar club – alongside Amazon, Apple and Alphabet – after benefiting from growing demand for chips used in generative artificial intelligence systems.
The Philadelphia Semiconductor Index is up more than 40% year-to-date, driven by the boom in the AI industry.
Meanwhile, pressure on US Treasuries eased as traders predicted the US debt ceiling bill, agreed to on Saturday, would pass through Congress sometime this week, ahead of schedule. default limit.
The yield on two-year policy-sensitive notes fell 0.09 percentage point to 4.5%. The yield on the 10-year benchmark note fell 0.11 percentage points to 3.71%. Bond yields fall as prices rise.
The yield on Treasuries maturing next month – around the time the government could run out of money – fell slightly to 5.27%, after hitting a high last week level in more than 20 years.
Garrett Melson, portfolio strategist at Natixis Investment Managers, said: “Nothing is certain until (the bill) is on the president’s desk and signed, but at the end of the day it certainly points to the fact that a lot of those worst-case scenarios aren’t going to play out here.
The deal would raise the country’s debt ceiling to $31.4 billion for two years until the next presidential election in late 2024. The bipartisan bill must pass both houses of Congress, with traders ready for the first vote in the House of Representatives on Wednesday.
Meanwhile, the latest Conference Board report showed that US consumer confidence declined in May as perceptions of the job market and future business conditions deteriorated amid persistent inflation and concerns. regarding a possible recession.
In Europe, the regional Stoxx 600 fell 0.9%, the CAC 40 lost 1.3% and the FTSE 100 fell 1.4%.
In the foreign exchange markets, the Turkish lira weakened to 20.4 TL against the US dollar, hitting a record high after President Recep Tayyip Erdoğan claimed victory in the country’s elections over the weekend.
The Hang Seng China Enterprises Index fell in Tuesday’s Asian session, dragging it down 20% from its January high. This temporarily put it in bearish territory, although it then rallied to close 0.5% higher.
China’s benchmark CSI 300 index of stocks listed in Shanghai and Shenzhen also fell more than 10% from its peak this year, matching the technical definition of a market correction, although it is falling. will also recover later to close slightly higher.
The pressure on Chinese stocks follows growing worries about the outlook for the world’s second-largest economy as tensions rise between Washington and Beijing.
The relentless selling reflects a growing consensus among investors that the country’s economic recovery is running out of steam, some six months after Beijing abandoned President Xi Jinping’s disruptive zero-Covid 19 policy.
Winnie Wu, China equity strategist at Bank of America, said clients had described many Chinese stocks as “too cheap to go short but not good enough to go long.”
Wu said that while Chinese equity valuations had turned attractive, the recovery remained weaker than expected and the economy would likely continue to underperform without greater state support.