Tech Stocks Edge Up Beneath Debt Ceiling Shadow: Markets Wrap
(Bloomberg) -- US stocks fluctuated ahead of a crucial meeting between US President Joe Biden and Republican House Speaker Kevin McCarthy to iron out road blocks in debt-ceiling negotiations.
Most Read from Bloomberg
Biden-McCarthy Debt Talk Ends With Optimism, But Without a Deal
Parents Sue Elite Schools for ‘Indoctrinating’ Their Kids With Anti-Racist Policies
The S&P 500 drifted between gains and losses. Yields on short-term Treasuries rose. And the tech-heavy Nasdaq 100 advanced, though chipmakers were under pressure. China said products by Micron Technology Inc. failed a cybersecurity review. Meanwhile, Pfizer Inc. rose on a report its weight loss pill may be as effective as Ozempic. And Zoom Video Communications Inc. was higher in after-hours trading after raising its annual sales forecast.
The big question on investors’ minds is whether US politicians will be able to reach a deal to raise the debt limit before the government runs out of money. Treasury Secretary Janet Yellen said the chances are “quite low” that the US can pay all its bills by mid-June.
“There is a lot of showmanship around the debt ceiling,” said Sarah Hewin, senior economist at Standard Chartered. “The closer we get to June 1 without a resolution, the greater the risk of an accident, so there is a lot of potential for markets to get concerned.”
Tech is at least one beneficiary in the meantime. Elyse Ausenbaugh, a global investment strategist at JPMorgan Wealth Management, said mega-cap tech already “went through that phase of retrenching and refocusing their businesses, and so investors are starting to gravitate there.” The Nasdaq 100 surpassed a 52-week high on Monday.
The debt ceiling is “all-consuming now,” wrote Chris Low, chief economist at FHN Financial. “But when Congress raises it, attention will return to the economy and the Fed.”
St. Louis Federal Reserve President James Bullard said he’s thinking of two more rate hikes this year, while Minneapolis Fed President Neel Kashkari said if the US central bank pauses next month it should signal tightening isn’t over.
Elsewhere, Greek markets were a bright spot. Sunday’s national election resulted in a strong showing for Prime Minister Kyriakos Mitsotakis, signaling investment-friendly policies can continue. The benchmark Athens Stock Exchange Index jumped to its highest level in almost a decade. Meanwhile, the Euro Stoxx 600 was little changed on the day.
Commodities were broadly weaker because of concern over China’s post-Covid economic recovery. Iron ore futures dropped on signs of disappointing steel demand from the construction sector. However, Asian equities ended higher after Biden hinted about improving relations with Beijing. His prediction that Sino-US ties would “begin to thaw very shortly” lifted Hong Kong stocks more than 1%.
Key events this week:
Eurozone S&P Global Eurozone Manufacturing & Services PMI, Tuesday
US new home sales, Tuesday
Dallas Fed President Lorie Logan speaks, Tuesday
Fed issues minutes of May 2-3 policy meeting, Wednesday
Bank of England Governor Andrew Bailey speaks, Wednesday
US initial jobless claims, GDP, Thursday
Interest rate decisions in Turkey, South Africa, Indonesia, South Korea, Thursday
Tokyo CPI, Friday
US consumer income, wholesale inventories, durable goods, University of Michigan consumer sentiment, Friday
Some of the main moves in markets:
The S&P 500 was little changed as of 4 p.m. New York time
The Nasdaq 100 rose 0.3%
The Dow Jones Industrial Average fell 0.4%
The MSCI World index was little changed
The Bloomberg Dollar Spot Index rose 0.1%
The euro was little changed at $1.0811
The British pound fell 0.1% to $1.2432
The Japanese yen fell 0.4% to 138.60 per dollar
Bitcoin was little changed at $26,870.54
Ether rose 0.6% to $1,816.85
The yield on 10-year Treasuries advanced five basis points to 3.72%
Germany’s 10-year yield advanced three basis points to 2.46%
Britain’s 10-year yield advanced seven basis points to 4.06%
West Texas Intermediate crude rose 0.6% to $71.99 a barrel
Gold futures fell 0.4% to $1,992.80 an ounce
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Sujata Rao, Tassia Sipahutar, Richard Henderson, Aline Oyamada and Allegra Catelli.
Most Read from Bloomberg Businessweek
The Man Who Spends $2 Million a Year to Look 18 Is Swapping Blood With His Father and Son
Maasai Are Getting Pushed Off Their Land So Dubai Royalty Can Shoot Lions
Japan’s New Military Might Is Rising in a Factory in Hiroshima
©2023 Bloomberg L.P.