Stock Market Today: Dow Ends Week Lower Despite Pickup in Debt Ceiling Optimism

Investing.com — The Dow ended the week lower despite rebounding on Friday as optimism grew that negotiators in Washington are moving closer to a debt ceiling deal that is needed to prevent the United States from defaulting your debt payments.

It was up 1%, or 328 points, though it ended the week in the red. It rose 1.3% and added 2.2%, posting its best week since mid-March.

Republican and White House negotiators appear closer than ever to a breakthrough in debt ceiling talks after narrowing a potential deal that seeks to raise the debt limit and cap federal spending for two years until 2024, according to media reports.

The countdown to a deal is being closely watched, as the latest data showed the US Treasury had about $38.8 billion in cash as of Thursday that it uses to pay its bills, compared to a balance average of about $500 billion available.

If a deal is announced Friday night or Saturday (May 27), Goldman Sachs he believes this “would likely allow for a House vote on Tuesday night (May 30) or Wednesday (May 31).”

Rising optimism about a breakthrough in debt ceiling talks bolstered investor confidence in stocks, even as stronger data on consumer spending and inflation tipped the balance in favor of a hike in types in June.

Monthly rose 0.8% in April, beating economists’ estimates of 0.4%, while it rose 0.4% and also came in hotter than expected.

“The stronger-than-expected turnout in price pressures and consumer spending will make it increasingly difficult for the Fed to pause in June,” Sitfel said in a note.

About 65% of traders now expect the Fed to raise rates in June, compared with just 15% last week, according to Investing.com.

Fed interest rate tracking tool.

it rose in anticipation of further hikes, but this did not dent optimism in the interest rate sectors of the market, including technology and consumer discretionary.

Meta Platforms Inc (NASDAQ:), Apple Inc (NASDAQ:) and Microsoft (NASDAQ:) pushed big tech higher, while Amazon.com Inc (NASDAQ:) and Tesla Inc (NASDAQ:) were the biggest gainers in discretionary consumption.

Tesla Inc gained about 5% after the electric vehicle maker announced a partnership with Ford Motor Company (NYSE:) that would give the latter access to its Superchargers in the US and Canada.

The technology was also helped by a second day of strong gains in semiconductor shares. NVIDIA Corporation (NASDAQ:) joined their rally from the previous day, while Marvell Technology Group Ltd (NASDAQ:) rose 32% after estimating that AI revenue growth would at least double in fiscal 2024.

Gap Inc (NYSE:) was also a big winner on the earnings front, rebounding 12% after its quarterly report, released Thursday, showed improving margins.

“[W]We believe the management execution within the Old Navy core banner is beginning to improve with better assortments and improved market share gains in women and babies.” Goldman Sachs said in a note.

Ulta Beauty (NASDAQ:), meanwhile, fell 13% after the beauty retailer’s cut in its margin outlook offset first-quarter outperforming on both the top and bottom lines.

Still, falling stocks could prove to be a short-term pain but a long-term gain, UBS he says, estimating that Ulta Beauty “will resume an upward trajectory later in the year…as the market sees signs that it can maintain its somewhat double-digit EPS for an extended period.”

In other news, JPMorgan Chase & Co (NYSE:) gained 1% as the Wall Street bank cut around 500 jobs this week, CNBC reported, citing unnamed sources.