Dow jumps more than 300 points as Biden, McCarthy appears set to reach a deal to raise the US debt limit
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US stocks jumped Friday on reports the White House and Republican leadership are nearing a deal to raise the debt ceiling.
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A potential deal could raise the $31 trillion debt limit for two years.
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The Fed’s preferred inflation gauge showed price pressures rose in April.
US stocks jumped Friday on reports that negotiators representing President Joe Biden and Republican leader Kevin McCarthy are nearing a deal to raise the country’s debt ceiling, a crucial step in avoiding a US debt default.
Tech stocks surged, leading the Nasdaq Composite sharply higher, and the Dow Jones Industrial Average scored its first win after falling over the past five sessions.
Multiple news reports Friday said Biden and House Speaker McCarthy were close to a deal to lift the $31 trillion debt ceiling for two years. Lawmakers have been racing against a June 1 deadline the Treasury Department has said could be the date when it will run out of cash to pay the country’s bills.
An emerging deal may essentially freeze government spending on domestic programs and slightly increase funding for the military and veterans affairs, The Washington Post reported. Republicans have been pushing for spending cuts while Democrats want to preserve funding for education and environmental protection.
Here’s where US indexes stood at the 4:00 pm closing bell on Friday:
The stock market has remained stable even in the face of the debt ceiling uncertainty, as investors trust that a deal will be reached, and any market wobbles driven by the debt ceiling are likely to be short-lived, Carol Schleif, chief investment officer at BMO Family Office, said in a Friday note.
“We expect the stock market to remain headline driven for the next few weeks until the debt ceiling uncertainty passes,” she wrote.
Equities held to gains after the Federal Reserve’s preferred inflation gauge, the core PCE index, rose to 4.7% year over year in April, higher than expectations of 4.6%.
“The rise in prices puts a June hike back in play, perhaps even greater than a quarter percent hike in a last-ditch effort by the Fed to put out the inflationary fire once and for all,” Peter Essele, head of portfolio management for Commonwealth Financial Network, wrote in a note.
Here’s what else is happening today:
In commodities, bonds, and crypto:
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