Stocks rebounded on hopes that a narrower group of Washington negotiators will help break a deadlock on raising the debt ceiling to avoid a US default.
(Bloomberg) — Stocks rebounded on hopes that a narrower group of Washington negotiators will help break a deadlock on raising the debt ceiling to avoid a US default.
The S&P 500 advanced for the second time in three days, but remained stuck in one of the narrowest trading ranges in years, with investors seemingly reluctant to make any big bets at this stage. Both President Joe Biden and House Speaker Kevin McCarthy said Wednesday they are confident there will be no debt default.
“We don’t want to get too excited as the two sides reportedly remain far apart,” said Win Thin, global head of currency strategy at Brown Brothers Harriman. “However, we get the sense that there is a real effort to avert a debt ceiling catastrophe as the X-date of June 1 is fast approaching. Stay tuned.”
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Markets are betting on a rocky end to the debt-ceiling debate, but if they are wrong, investors may miss out on the gains, according to Amy Wu Silverman, head of derivatives strategy at RBC Capital Markets.
“The tale of optimism does not exist,” she told Bloomberg Television. “Is there a possibility of a congressional miracle? If it at all comes in a little bit easier than we expect, that right tail is very cheap.”
Also helping sentiment Wednesday was a rally in regional banks after Western Alliance Bancorp reported growth in deposits, easing worries about the health of the industry. Target Corp. stood by its annual outlook after posting higher-than-expected profit in the first quarter, even as “softening sales trends” threaten to crimp short-term results.
Key events this week:
- US initial jobless claims, Conference Board leading index, existing home sales, Thursday
- Japan CPI, Friday
- ECB President Christine Lagarde participates in panel at Brazil central bank conference, Friday
- New York Fed’s John Williams speaks at monetary policy research conference in Washington; Fed Chair Jerome Powell and former chair Ben Bernanke to take part in panel discussion, Friday
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.3% as of 11:26 a.m. New York time
- The Nasdaq 100 rose 0.3%
- The Dow Jones Industrial Average rose 0.3%
- The Stoxx Europe 600 fell 0.2%
- The MSCI World index was little changed
Currencies
- The Bloomberg Dollar Spot Index rose 0.3%
- The euro fell 0.3% to $1.0827
- The British pound was little changed at $1.2476
- The Japanese yen fell 0.8% to 137.46 per dollar
Cryptocurrencies
- Bitcoin fell 0.8% to $26,751.22
- Ether fell 1.5% to $1,794.91
Bonds
- The yield on 10-year Treasuries advanced two basis points to 3.56%
- Germany’s 10-year yield declined two basis points to 2.33%
- Britain’s 10-year yield advanced two basis points to 3.83%
Commodities
- West Texas Intermediate crude rose 1.6% to $71.99 a barrel
- Gold futures fell 0.3% to $1,986.10 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Cecile Gutscher.
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