© Reuters. FILE PHOTO: A trader work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 24, 2023. REUTERS/Brendan McDermid
By Shreyashi Sanyal
(Reuters) – The Nasdaq led gains among Wall Street’s main indexes on Tuesday, boosted by shares of Nvidia (NASDAQ:), amid optimism about lawmakers tentatively agreeing to raise the nation’s debt limit to avert a default.
U.S. President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy on Sunday signed off on an agreement to temporarily suspend the debt ceiling and cap some federal spending.
The U.S. House Rules Committee said it will meet at 3:00 p.m. ET (1900 GMT), to discuss the debt ceiling bill.
A handful of Republican lawmakers have said they will oppose it, in a sign that the bipartisan agreement could face a rocky path through Congress.
“The market is cautiously pricing in that the deal has been done,” said Thomas Hayes, chairman at Great Hill Capital LLC.
Reflecting investor optimism, the cost of insuring exposure to a U.S. debt default fell further on Tuesday, while yields on longer-dated U.S. Treasuries fell. [US/]
Nvidia Corp jumped 6.2% to a record, as the world’s most valuable chipmaker breached $1 trillion in market capitalization for the first time.
Shares of heavyweight AI-player Microsoft Corp (NASDAQ:) rose 0.7%.
The gained 2.2%, touching its highest level since February 2022. The broader S&P 500 technology sector index added 2.0%.
The hovered near its highest level since August 2022, well above 4,200 points.
“If this AI trend is real, the immediate demand is going to be in chips and computing power … and Nvidia is the poster child for AI at the moment,” Hayes said.
At 10:12 a.m. ET, the was down 109.41 points, or 0.33%, at 32,983.93, the S&P 500 was up 5.84 points, or 0.14%, at 4,211.29, and the was up 72.89 points, or 0.56%, at 13,048.58.
Five of the 11 major S&P 500 sectors rose within the first hour of trading, with energy stocks down 1.9%.
However, the gains were kept in check by data showing a higher-than-expected increase in consumer confidence in May, potentially supporting bets that the Federal Reserve may not be done with its rate-hiking regime.
The data arrived before the Labor Department’s closely watched nonfarm payrolls data for May on Friday.
Traders are now pricing for a 63% chance of a 25 basis point increase at the Fed’s June 13-14 meeting. [FEDWATCH]
Dow component Chevron Corp (NYSE:) fell 1.6%, tracking slipping oil prices. [O/R]
Tesla (NASDAQ:) shares advanced 4.9%, extending Friday’s gains.
The company’s top boss, Elon Musk, arrived in China’s capital Beijing on Tuesday, where he is expected to meet senior Chinese officials and visit the EV maker’s Shanghai plant.
Even with the overhang of the debt ceiling debate, the S&P 500 and the Nasdaq are set for gains in May.
Advancing issues outnumbered decliners by a 1.32-to-1 ratio on the NYSE and by a 1.61-to-1 ratio on the Nasdaq. The S&P index recorded 20 new 52-week highs and 12 new lows, while the Nasdaq recorded 70 new highs and 28 new lows.
