Equities were slightly higher Friday morning as investors awaited developments in Washington’s debt ceiling deliberations and processed the latest corporate earnings.
The S&P 500 (^GSPC) rose 0.18%, while the Dow Jones Industrial Average (^DJI) rose 60 points, or 0.18%. The tech-heavy Nasdaq Composite (^IXIC) rose 0.25%.
Both the Dow Jones and the S&P 500 came on track Friday to finish the week lower after debt ceiling discussions weighed on markets slightly throughout the week. On Friday morning, Reuters reported that President Joe Biden and Speaker of the House Kevin McCarthy are “close to a deal” to extend the government’s debt ceiling by two years.
“Negotiators appear to be moving closer to an agreement,” Goldman Sachs’ economic research team led by Jan Hatzius wrote in a note to clients Thursday evening.
“While it’s hard to predict when an announcement might come, we think the most likely deal is likely to be announced late on Friday (May 26) or on Saturday (May 27). If so, it would likely be vote on Tuesday.” (May 30) or Wednesday (May 31). The Senate must also approve the deal, although it is unlikely there will be any procedural hurdles preventing a timely entry into force,” they added.
The Nasdaq rose 1.7% on Thursday, as Nvidia’s (NVDA) blowout quarter sent shares of the chip giant soar more than 24%. Also on Friday morning, earnings continued to move stocks.
Shares of Marvell Technology (MRVL) rose more than 23% as the chipmaker joined Nvidia in sharing positive artificial intelligence news. Marvell believes revenue attributable to AI could double in the coming year.
Elsewhere in earnings, Gap (GPS) stock rose more than 10% after the clothing retailer posted a surprise gain late Thursday. Meanwhile, shares of Ulta Beauty (ULTA) fell nearly 10% after the company warned of slowing growth trends, even though the beauty store chain topped Wall Street’s revenue and earnings per share for the first quarter.
“Category growth is healthy, but slowing as we move through two years of unprecedented growth. And as category growth normalizes, promotional activity is ramping up,” Ulta CEO Dave Kimbell said on the company’s earnings call.
On the economic front, the PCE price index – the Federal Reserve’s preferred measure of inflation – came out hotter than expected. Core PCE rose to 4.7% year-on-year in April, compared to economists’ expectations of 4.6%, and was also 0.1% higher than the previous month.
The tacky inflation print will be the focus of attention for investors tracking the Federal Reserve’s next decision on rate hikes ahead of the June 14 announcement.
“We stand by the forecast that the Fed will leave rates unchanged for the remainder of this year,” Oxford Economics chief economist Ryan Sweet wrote Friday. “However, there is an increasing likelihood that we will change the forecast for Fed Funds rates in 2024, reducing the number of rate cuts.
“The Minutes continue to indicate that the Fed is not too happy with the inflation trajectory and wants more evidence that it will return to their target and the Fed is normally more patient when the labor market is tight when it comes to easing.” .”
Data showed that personal income and spending figures rose more sharply in April than in March. The 0.8% rise in personal spending in April was 0.3% higher than expected, according to Bloomberg.
An update on durable goods orders also provided a surprise. The preliminary reading from April showed a 1.1% increase in durable goods orders, while a 1% decline was expected.
A final reading of the University of Michigan’s Consumer Sentiment Index is also expected on Friday.
Josh is a reporter for Yahoo Finance.
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