Dow jumps over 300 points as Biden and McCarthy look set to strike deal to raise US debt limit

President Joe Biden and Speaker of the House Kevin McCarthy

House Speaker Kevin McCarthy and President Joe Biden met in the Oval Office on May 9.Anna Moneymaker/Getty Images

  • U.S. stocks jumped on Friday after reports that the White House and Republican leaders are close to reaching a deal to raise the debt ceiling.

  • A potential deal could increase the debt limit by $31 trillion for two years.

  • The Fed’s favorite inflation gauge showed price pressures increased in April.

U.S. stocks jumped on Friday after reports that negotiators representing President Joe Biden and Republican leader Kevin McCarthy are close to reaching a deal to raise the country’s debt ceiling, a crucial step to avoid a default. payment of the American debt.

Tech stocks surged, leading the Nasdaq Composite to a strong rally, and the Dow Jones Industrial Average earned its first win after falling for the past five sessions.

Multiple news reports on Friday said Biden and House Speaker McCarthy were close to an agreement to lift the $31 trillion debt ceiling for two years. Lawmakers have been battling a June 1 deadline, which the Treasury Department says could be the date it will run out of money to pay the country’s bills.

An emerging deal could essentially freeze government spending on national programs and slightly increase funding for military and veterans affairs, The Washington Post reported. Republicans have pushed for spending cuts while Democrats want to preserve funding for education and environmental protections.

Here’s where the U.S. indices stood at the 4:00 p.m. closing bell on Friday:

The stock market has held steady even in the face of debt ceiling uncertainty as investors hope for a deal, and any market swings caused 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-focused over the coming weeks until the debt ceiling uncertainty passes,” she wrote.

Stocks held on to gains after the Federal Reserve’s favorite inflation gauge, the core PCE index, hit 4.7% year-on-year in April, above expectations of 4, 6%.

“Rising prices put a June rise back into play, perhaps even more than a quarter percent in a last-ditch effort by the Fed to put out the inflationary fire once and for all,” Peter Essele, chief investment officer of portfolio for Commonwealth Financial Network, wrote in a note.

Here’s what else is happening today:

In commodities, bonds and crypto:

Read the original article on Business Insider

Leave a Comment