- Nvidia hits $1 trillion market cap for first time
- US consumer confidence better than expected in May
May 30 (Reuters) – Wall Street stocks ended mixed on Tuesday, pressured by concerns US lawmakers are opposed to a deal to raise the $31.4 trillion debt ceiling but helped by another Nvdia stock surge that briefly propelled the chipmaker into the rare business category of $1 trillion companies.
The S&P 500 (.SPX) index closed flat but remained near its highest level since August 2022, just above 4,200 points. The Dow Jones Industrial Average was also lower, while the Nasdaq Composite (.IXIC) rose. The S&P 500 and Nasdaq continued to be set for monthly gains in May.
Over the weekend, US President Joe Biden and Republican House Speaker Kevin McCarthy agreed to temporarily suspend the debt ceiling and cap some federal spending.
On Tuesday, McCarthy said the deal would be “easy” for Republicans to vote and likely pass, but some right-wing Republicans said they opposed the bipartisan deal.
“I wouldn’t be surprised if the first vote failed and they had to resign again,” said Sam Stovall, chief investment strategist at CFRA in New York. But I firmly believe that a debt ceiling agreement will be passed before the June 5 deadline.”
The House Rules Committee was scheduled to consider the 99-page bill from 3pm ET (1900GMT) on Tuesday.
Nvidia Corp (NVDA.O) trimmed gains after hitting a record high as the company expects demand for its AI chips, which power chatbot sensation ChatGPT and other applications, to surge. A close above $404.86 would add Nvdia to six other companies valued at $1 trillion or more.
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Digital Realty (DLR.N) was also up, after rising 14.6% in the previous two sessions on expectations that data centers will benefit from AI computing.
Federal Reserve rate hikes to fight stubborn inflation are hurting economic growth and corporate earnings, allowing about 20 companies to earn a 10% total return on the S&P 500 so far this year, said Anthony Saglimbene, chief markets strategist at Ameriprise Financial in Troy, Michigan.
A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 24, 2023. REUTERS/Brendan McDermid
“Passing the debt ceiling bill will not eliminate the other overhangs that are still in the market,” he said, adding that the majority of stocks have been virtually flat this year.
“That is more meaningful for this market environment than the actual index development of these few technology stocks.”
The Philadelphia SE Semiconductor Index (.SOX) was little changed, but its session high was the highest since February 2022.
“Nvidia is currently the poster child for AI,” said Thomas Hayes, chairman of Great Hill Capital LLC. “If this AI trend is real, then there will be immediate demand for chips and processing power.”
Only four of the S&P 500’s 11 sectors posted gains, while declining stocks outweighed rising stocks in both the S&P 500 and the Nasdaq.
The Dow Jones Industrial Average (.DJI) fell 50.49 points, or 0.15%, to close at 33,042.85. The S&P 500 (.SPX) gained 0.15 points to close flat at 4,205.6. The Nasdaq Composite (.IXIC) gained 41.74 points, or 0.32%, to close at 13,017.43.
Data showed that consumer confidence rose more-than-expected in May, fueling speculation that the Fed may hike rates further to fight inflation.
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Futures traders see a 65 percent chance of a 25 basis point rate hike by the end of the June 13-14 Fed meeting. FEDWATCH
The closely watched Labor Department jobless report for May, due on Friday, should give an indication of how resilient the economy has been as higher interest rates cut corporate credit lines.
Shares of Tesla (TSLA.O) rose, extending Friday’s gains. CEO Elon Musk arrived in China’s capital Beijing for the first time in three years.
Reporting by Shreyashi Sanyal and Shashwat Chauhan in Bengaluru; Edited by Shounak Dasgupta, Maju Samuel and David Gregorio
Our standards: The Thomson Reuters Trust Principles.
Shreyashi Sanyal
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