Stocks surged on Wednesday as investors remained hopeful that debt-ceiling talks between President Joe Biden and congressional leaders will produce a breakthrough.
The S&P 500 (^GSPC) advanced 1.19%, while the Dow Jones Industrial Average (^DJI) gained 1.24%, or more than 400 points. The technology-heavy Nasdaq Composite (^IXIC) increased 1.28%.
Wall Street has been kept on its toes as the White House and congressional leaders try to thrash out a deal to avoid a looming US debt default. A smaller group of negotiators is taking over as President Joe Biden travels to Asia, but he has announced plans to cut short his trip this week.
Treasury Secretary Janet Yellen and others have warned of catastrophic impacts on the US economy in the case of a default, seen as potentially coming as early as June.
On Wednesday, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said the US government “probably”will not default on its debt obligations. Dimon joined other top executives of major banks in a meeting with Senate Majority Leader Chuck Schumer to discuss the debt-ceiling standoff.
The yield on the 30-year Treasury bond was little changed. The yield on the 10-year note rose to 3.57%, while the two-year note yield traded up to 4.15%. The dollar index strengthened, while gold prices weakened sinking below $2,000.
“While [House Speaker Kevin] McCarthy said a deal is possible by end of this week, the timeline may be by the end of next week ahead of Memorial Day,” JPMorgan’s US market intelligence team wrote in a note Wednesday.
President Biden plans to stay in touch with McCarthy over the coming days. Any breakthrough in the talks could potentially impact markets, the team said.
“With that in mind, equities may trade in a tight range until an outcome is observed with the biggest downside risk coming if we enter Memorial Day weekend without a solution, given the early June X-date,” the JPMorgan team added.
Elsewhere, on the housing front, US housing starts grew 2.2% in April to an annualized 1.4 million units, according to government data released Wednesday. On a yearly basis, that’s still a 22.3% drop. Single-family starts increased 1.6% month-over-month to the highest level in 2023.
Building permits issued fell 1.5% to an annualized 1.41 million units in April and registered a 21.1% drop year-over-year as multi-family permits issued tanked 9.7% month-over-month.
Also on the docket were earnings releases from retailers including Target (TGT) and The TJX Companies, Inc. (TJX) before the bell on Wednesday, which gave further insight on the consumer health and a gauge on recession probabilities.
Target (TGT) topped Wall Street’s earnings expectations, but took a cautious tone on consumers, seen as hesitant on discretionary spending. The retailer guided second-quarter earnings below analyst estimates, dampening its view of the back-to-school shopping season. Shares moved higher over 2% Wednesday following the earnings results.
Meanwhile, The TJX Companies, which owns TJ Maxx, Marshalls, and Home Goods, posted an earnings beat for its first quarter, while also offering disappointing guidance. Shares nudged higher Wednesday after the results.
In single-stock moves, shares of Tesla, Inc. (TSLA) advanced more than 4% after the EV maker held its annual shareholder meeting after the bell on Tuesday. At the event, CEO Elon Musk said he has no plans to step down as CEO and retained his board seat for another term.
Shares of Wix.com Ltd. (WIX) rallied over 1% Wednesday after the cloud services developer posted a net profit in the first quarter, boosted by growth in subscription revenue.
Advanced Micro Devices, Inc. (AMD) shares moved higher Wednesday as Bernstein analyst Stacy Rasgon reiterated his Market-Perform ratings in a note on Tuesday and $80 stock forecast for AMD.
Shares of Taiwan Semiconductor Manufacturing Company Limited (TSM) gained more than 5% after reports swirled that Japan’s Prime Minister Fumio Kishida plans to meet with executives at the company and six other chip firms to seek active investment in Japan and tighter cooperation with Japanese companies.