Tech companies with a big plus
Debt dispute rapprochement boosts Wall Street
05/26/2023, 11:00 p.m
Even if the debt crisis in the USA has not yet been resolved, a real sigh of relief can be felt on the US financial markets. Prices are going up noticeably. The tech industry in particular benefits from this, but two car manufacturers also give a good picture.
A rapprochement in the debt dispute makes US investors resort to stocks again at the end of the week. Gains in the US technology sector also lifted sentiment. In view of persistent inflation, however, the topic of interest rate hikes does not seem to be over yet. The Dow Jones Index the standard values closed one percent higher at 33,093 points. The tech-heavy one Nasdaq advanced 2.2 percent to 12,975 points. The broad one S&P 500 increased 1.3 percent to 4205 points.
After several rounds of negotiations, President Joe Biden and Republican Congressman Kevin McCarthy are moving forward in a wrangling over an increased government debt ceiling of $31.4 trillion for two years. At the same time, spending on most items is to be limited. “The market is reacting really well to an anticipated deal and it looks like the framework for the agreement is about to be implemented and we are seeing some relief rally,” said David Sadkin of wealth advisor Bel Air Investment Advisors. The uncertainty has been driving stockbrokers for days, because without an agreement, according to the Treasury Department in Washington, the United States is threatened with insolvency from the beginning of June.
Open interest rate decision
Once this issue is settled, the stock market should once again focus on future interest rate developments, said Konstantin Oldenburger, market analyst at CMC Markets. Investors concluded from fresh US inflation data that the end of interest rate hikes in the US has not yet come and increased their bets on the futures markets. The development of personal consumer spending – a measure of inflation that the Fed pays particular attention to – shows that the risks are still high. This does not include the volatile food and energy costs. This so-called PCE core index rose slightly from 4.6 to 4.7 percent in April. The Fed is targeting an inflation rate of 2 percent.
Yields rose in bond markets after the data release. The yield on the 10-year US Treasury rose to 3.808 percent from 3.77 percent previously. The interest for the ten-year federal bonds rose five basis points to 2.54 percent. Euro inflation data due next week should set the direction for future European Central Bank (ECB) yields and action.
Chip values soaring
In the technology sector towered Marvell with a price gain of more than 32 percent. Similar to the rival Nvidia the chip company is hoping for a boom in demand as a result of the hype surrounding artificial intelligence (AI). Sales of computer chips for the high-performance computers required for this would probably double in the current year and also grow strongly beyond that, predicted CEO Matt Murphy. Other semiconductor companies were also in demand. The Philadelphia SE Semiconductor Index rose more than six percent.
A restructuring pays off gap gradually off. The shares of the US fashion chain climbed by around twelve percent. The group with the brands Old Navy and Banana Republic surprisingly achieved a profit in the first quarter on an adjusted basis. shares of ford increased more than six percent. The US automaker has agreed with Tesla to become the first major manufacturer to have access to the largest network of high-speed charging stations in the United States. Papers from the e-car manufacturer Tesla were up almost five percent.