U.S. Stocks Continue To See Significant Strength After Early Rally

After moving sharply higher early in the session, stocks continue to see significant strength in afternoon trading on Friday. The tech-heavy Nasdaq is adding to the substantial gain posted in the previous session, reaching a nine-month intraday high.

Currently, the Nasdaq is up 265.49 points or 2.1 percent at 12,963.58 and the S&P 500 is up 49.46 points or 1.2 percent at 4,200.74. The narrower Dow is also up 284.80 points or 0.9 percent at 33,049.45 after ending Thursday’s trading at its lowest closing level in almost two months.

Stocks are benefiting from renewed optimism about raising the U.S. debt ceiling amid reports lawmakers are closing in on an agreement.

Recent reports suggest lawmakers are inching closer to an agreement that would raise the debt limit for about two years and cap federal spending at the same level as fiscal 2023 for two years.

A report from CNBC said the deal would also include rescinding some of the $80 billion allocated for the IRS by last year’s Inflation Reduction Act.

House Speaker Kevin McCarthy, R-Calif., told reporters negotiators made progress during a meeting Thursday night and expressed optimism they would make “more progress today and finish the job.”

Optimism about a debt ceiling deal has overshadowed a Commerce Department showing a reacceleration in the annual rate of consumer growth in the month of April.

The report said the annual rate of consumer price growth accelerated to 4.4 percent in April after slowing to 4.2 percent in March. Economists had expected the pace of growth to slow to 3.9 percent.

The annual rate of growth by core consumer prices, which exclude food and energy prices, also accelerated to 4.7 percent in April after slowing to 4.6 percent in March. Economist had expected the pace of growth to be unchanged.

On a monthly basis, consumer prices rose by 0.4 percent in April after inching up by 0.1 percent in March, while core consumer prices also increased by 0.4 percent in April after rising by 0.3 percent in March.

Ryan Sweet, Chief US Economist at Oxford Economics, said the data will “keep the discussion about the Fed skipping a hike in June and then resume tightening in July alive.”

Sector News

Technology stocks are once again leading the rally on Wall Street, with semiconductor stocks showing another substantial move to the upside.

Reflecting the strength in the sector, the Philadelphia Semiconductor Index has spiked by 5.3 percent to its best intraday level in well over a year.

Marvell Technology (MRVL) is leading the sector higher after the chipmaker reported better than expected fiscal first quarter results and said it expects revenue growth to accelerate in the second half.

Networking, computer hardware and software stocks are also seeing significant strength on the day, contributing to the surge by the Nasdaq.

Outside the tech sector, retail and airline stocks have shown strong moves to the upside, while some weakness is visible among interest rate-sensitive utilities stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan’s Nikkei 225 Index and China’s Shanghai Composite Index both rose by 0.4 percent, while South Korea’s Kospi inched up by 0.2 percent.

The major European markets also moved to the upside on the day. While the U.K.’s FTSE 100 Index advanced by 0.7 percent, the German DAX Index and the French CAC 40 Index both jumped by 1.2 percent.

In the bond market, treasuries have showing a lack of direction over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by less than a basis point at 3.808 percent.

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