US Stock Market Rises: Tech Rally Continues as AI Frenzy and Debt Ceiling Negotiations Encourage Buying

US stock market rises. The continued frenzy over artificial intelligence (AI) and growing speculation that the U.S. debt ceiling negotiations could reach a deal also encouraged buying.

The Nasdaq 100 Index rose 2.6%. Chip maker Marvell Technology said it expects AI-related product sales to “at least double” in January 2024 compared to the previous year, echoing the bullishness of rival Nvidia. Marvel is up 32%.

Semiconductor maker Marvel shares soars, predicts full-year AI sales to double

The fact that debt negotiations are nearing an agreement on raising the debt ceiling for two years and capping federal spending is also supportive. “We worked all night and I think we’ve made progress,” said House Speaker McCarthy. “I think we made progress this morning,” he continued.

McCarthy Says Debt Ceiling Negotiations Made Progress;

“The news of the debt ceiling prompted buying today, and the AI ​​frenzy continues,” said John Colobos, chief technical strategist at Macro Risk Advisors.

US Treasuries

Treasury bills, which are seen to be most at risk of defaulting on payments if the U.S. government runs out of money, fell slightly. Both TB rates, which expire early next month, when Treasury Secretary Yellen said the funds might run out, are below 6%.

Personal Consumption Expenditures (PCE) showed the Federal Open Market Committee (FOMC) needed more action to bring inflation down to its target. The PCE price index rose 0.4% month-on-month, beating expectations.

U.S. PCE price index accelerates pace of rise-Fed may maintain rate hike stance

“While we see a high likelihood of a debt deal ending before the FOMC meeting, any deal is almost certain to include fiscal tightening,” said Brian Rose, senior US economist at UBS Chief Investment Office. And that should reduce the need for rate hikes.” “If we get to X-Day, when the US government runs out of money, the impact will be severe and the odds of the FOMC raising rates are almost zero,” he said.

Yields on two-year bonds rose for the 11th straight day, marking the first long-term rally since September last year. The economic data have made it more likely that the FOMC will raise interest rates in June or July.

Two-year bond yields languished around 4.55% for some time, but rose again after Cleveland Fed President Mester’s remarks got across. “At the June meeting, all options will be on the agenda,” he said in an interview with CNBC after the inflation control has not progressed as hoped.

Cleveland Fed President to consider ‘all options’ at June FOMC

“There are two reasons why rates are rising: optimism that the U.S. will not default and downside risks to the economy are waning,” said Robert Tipp, chief investment strategist at PGIM Fixed Income. That’s it,’ he said.

foreign exchange

The dollar index has been reluctant to fall following the PCE data. The yen temporarily dropped to 140.73 yen to the dollar, its lowest since November 23, 2018.

crude

New York crude oil has rebounded, and on a weekly basis it has been high for two consecutive weeks. There was widespread speculation that progress had been made in negotiations on a debt ceiling to avoid a US default.

Market focus continues to be on supply dynamics. Saudi Arabia and Russia are in diametrically opposed positions on whether OPEC+, which consists of the Organization of the Petroleum Exporting Countries (OPEC) and non-member oil producers, will move to further cut oil production. Saudi Arabia’s Abdulaziz Energy has told short investors to “be careful”, while Russia’s Deputy Prime Minister Novak said further cuts were unlikely.

“Oil prices are in turmoil as uncertainty continues ahead of the U.S. debt ceiling negotiations and the OPEC+ meeting on June 4,” said Ed Moya, senior market analyst at Oanda. pointed out. “The resilience of the U.S. economy also complicates the picture for oil, as even a small boost to demand will inevitably put pressure on the economy from further interest rate hikes,” he said.

WTI futures on the New York Mercantile Exchange (NYMEX) closed at $72.67 a barrel, up 84 cents (1.2%) from the previous day. 1.6% increase for the week. London ICE North Sea Brent July delivery rose 69 cents to $76.95.

Money

New York gold futures held steady. On a weekly basis, it closed for three consecutive weeks. Economic statistics showed the strength of the US economy, raising the possibility that the tightening monetary policy will continue.

Negotiations over US debt ceiling nearing conclusionAmidst growing expectations, the gold market is in conflict. According to PCE statistics for April,Both inflation and consumer spending were shown to have accelerated.