Progress in US debt ceiling talks has bolstered global stock prices and sent gold prices to a two-month low on Thursday, while expected record sales from chipmaker Nvidia fueled a rally in AI-related companies.
Treasury yields rose and the US dollar rose to its highest level since mid-March.
European markets fell under pressure from news that the largest economy, Germany, has entered recession.
US President Joe Biden and Republican Kevin McCarthy, the top of Congress, were close to agreeing on the US debt ceiling, according to a person familiar with the talks. The two sides were only $70 billion away from a deal, the source said.
The S&P 500 climbed 0.88% to close out the session at 4,151.28 and the Nasdaq rose 1.71% to 12,698.09, while the Dow Jones Industrial Average fell 0.11% to 32,764.65.
Shares of Nvidia rose more than 24% after the company reported revenue that beat expectations, indicating that Wall Street has not yet assessed the potential of artificial intelligence.
The MSCI world stock index, which tracks stocks from 49 countries, rose 0.18%.
The pan-European STOXX 600 index closed 0.3% lower and posted three consecutive day losses to around 2.7%, undermined by recent losses in luxury stocks and concerns over talks to raise the US debt ceiling and face a default. turn.
Updated German GDP figures showed the eurozone powerhouse slipping into recession in the early months of the year, though a first reading suggested otherwise.
The data weighed on the euro, which fell 0.2%.
Asia was divided overnight, with Japan holding higher but Hong Kong falling almost 2% to its weakest level of the year following renewed geopolitical concerns surrounding Hong Kong-listed Chinese tech giants such as Tencent, Alibaba, AIA and Meituan.
News of progress in US debt talks came as traders were wary of a potential default in early June.
A credit rating downgrade can affect the price of trillions of dollars in Treasury bills. A warning of such a move by Fitch on Wednesday was echoed by smaller competitor DBRS on Thursday.
On interest rates, the minutes of the Federal Reserve’s latest meeting, published on Wednesday, showed that policymakers “generally agreed” that the need for further rate hikes had “become less certain.”
Susan Collins, chair of the Boston Fed, said on Thursday that the time may be right for the Federal Reserve to hit the pause button on its rate hike campaign to evaluate the effect of past tightening.
“Most of the morning’s data supported more Fed tightening, so traders ignored Fed’s Collins’ comment that a rate break would give us room to assess actions to date,” said Edward Moya, senior market analyst at OANDA.
The number of Americans filing new claims for unemployment benefits rose slightly last week, and data from the previous week was sharply cut, the Labor Department said.
The dollar index, which tracks the greenback against a basket of currencies from other major trading partners, rose to 104.25.
Treasury yields rose on signs of continued strength in the US labor market, but gains in short-term bonds were softened as Republican chief executive Kevin McCarthy said some progress had been made in talks to raise the debt ceiling.
Gold fell to a two-month low on Thursday as optimism surrounding US debt ceiling talks reduced demand for precious metal safe-havens and robust economic data fueled bets on another Fed rate hike.
“It’s a one-two punch for gold. … If a deal is reached over the weekend, it will remove the biggest risk,” Moya said.
Spot gold prices fell 0.87% to $1,939.97 an ounce, and gold futures settled 1.1% lower at $1,943.70.
Oil prices fell $3 a barrel after Russian Deputy Prime Minister Alexander Novak downplayed the prospect of further OPEC+ production cuts at next week’s meeting.
US crude finished 3.38% lower at $71.83 a barrel and Brent crude futures settled 2.7% lower at $76.25 a barrel.