Stocks were slightly higher on Friday morning as investors awaited developments on the debt ceiling deliberations in Washington and digested 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%.
The Dow Jones and S&P 500 entered Friday on track to end the week lower after talk of the debt ceiling weighed on markets slightly throughout the week. On Friday morning, Reuters reported that President Joe Biden and House Speaker Kevin McCarthy are “closer to an agreement” to extend the government’s debt ceiling by two years.
“Negotiators appear to be closing in on a deal,” Goldman Sachs’ economic research team led by Jan Hatzius wrote in a note to clients late Thursday.
“While it is difficult to predict when an announcement might take place, we believe the odds are highest that a deal will be announced late Friday (May 26) or Saturday (May 27). If so, that would likely allow for a vote in the House late Tuesday (May 30) or Wednesday (May 31). The Senate must also pass the deal, although procedural hurdles are unlikely to prevent timely enactment,” they added.
The Nasdaq rallied to close 1.7% higher on Thursday, as Nvidia’s (NVDA) booming quarter sent the chip giant’s stock up more than 24%. Earnings also continued to move stocks on Friday morning.
Shares of Marvell Technology (MRVL) rose more than 23% as the chipmaker joined Nvidia in sharing some positive artificial intelligence news. Marvell thinks its AI-attributable revenue could double next year.
Elsewhere in earnings, Gap (GPS) stock rose more than 10% after the clothing retailer posted a surprise profit on Thursday night. Meanwhile, Ulta Beauty (ULTA) shares fell nearly 10% after the company warned of slowing growth trends, even as the beauty retail chain beat Wall’s expectations. Street on revenue and earnings per share for the first quarter.
“Category growth is healthy but moderating as we navigate two years of unprecedented growth. And as category growth normalizes, promotional activity increases,” said Ulta CEO Dave Kimbell. , during 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. The core PCE rose to 4.7% in April year-on-year, from 4.6% expected by economists, and was also 0.1% higher than the previous month.
The impression of sticky inflation will be central to investors’ concerns following the Federal Reserve’s next decision on interest rate hikes ahead of the June 14 announcement.
“We will stick to the forecast that the Fed will keep rates unchanged until the end of the year,” Oxford Economics chief US economist Ryan Sweet wrote on Friday. “However, there is an increasing chance that we will change the forecast for the federal funds rate in 2024, reducing the number of rate cuts.
“The minutes continue to signal that the Fed is not too happy with the path of inflation and wants more evidence that it will return to its target and the Fed is normally more patient when the labor market is tight in regarding easing.”
The data showed personal income and spending data rose more in April than in March. The 0.8% increase in personal spending in April was 0.3% higher than expected, according to Bloomberg.
An update on durable goods orders also delivered a surprise. April’s preliminary reading indicated a 1.1% increase in durable goods orders, while expectations were for a 1% decline.
A final reading from the University of Michigan Consumer Sentiment Index is also expected on Friday.
Josh is a reporter for Yahoo Finance.
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