Stocks were slightly higher on Friday morning as investors waited for developments in the debt-ceiling deliberations in Washington and digested the latest corporate earnings.
The S&P 500 (^GSPC) rose 0.18%, while the Dow Jones Industrial Average (^DJI) rose 60 points, or 0.18%. The technology-heavy Nasdaq Composite (^IXIC) moved up 0.25%.
Both the Dow Jones and S&P 500 entered Friday on track to close the week lower after the debt-ceiling discussions slightly weighed on markets throughout the week. On Friday morning, Reuters reported that President Joe Biden and Speaker of the House Kevin McCarthy are “closing in on a deal” to extend the government’s debt ceiling for two years.
“Negotiators appear to be closing in on an agreement,” Goldman Sachs economic research team led by Jan Hatzius wrote in a note to clients on Thursday night.
“While it is hard to predict when an announcement could come, we think the odds are highest that a deal is announced late Friday (May 26) or on Saturday (May 27). If so, this would likely allow a House vote late Tuesday (May 30) or Wednesday (May 31). The Senate also needs to pass the deal, though procedural obstacles there are unlikely to be what prevents timely enactment,” they added.
The Nasdaq rallied to close 1.7% higher on Thursday as Nvidia’s (NVDA) blowout quarter sent the chip giant’s stock soaring more than 24%. Earnings continued to move stocks on Friday morning as well.
Shares of Marvell Technology (MRVL) rose more than 23% trading as the chipmaker joined Nvidia in sharing positive artificial intelligence news. Marvell believes its revenue attributable to AI could double in the next year.
Elsewhere in earnings, Gap (GPS) stock rose more than 10% after the apparel retailer posted a surprise profit late Thursday. Meanwhile, shares of Ulta Beauty (ULTA) fell nearly 10% after the company warned of slowing growth trends, even though the beauty store chain beat Wall Street’s revenue and earnings per share expectations for the first quarter.
“Category growth is healthy but moderating as we lap two years of unprecedented growth. And as category growth normalizes, promotional activity is increasing,” Ulta CEO Dave Kimbell said on the company’s earnings call.
On the economic front, the PCE price index — the Federal Reserve’s preferred inflation measure — came in hotter than expected. Core PCE rose to 4.7% in April year-on-year, compared with economist expectations for 4.6%, and was also 0.1% higher than the month before.
The sticky inflation print will be in focus for investors tracking the Federal Reserve’s next decision on interest rate hikes ahead of the June 14 announcement.
“We will be sticking with the forecast for the Fed to keep rates unchanged through the remainder of this year,” Oxford Economics chief US economist Ryan Sweet wrote on Friday. “However, odds are rising that we will be altering the forecast for the fed funds rate in 2024, reducing the number of rate cuts.
“The minutes continue to signal that the Fed isn’t overly happy with the trajectory of inflation and want more evidence that it is going to return to their target and the Fed is normally more patient when the labor market is tight when it comes to easing.”
Data showed personal income and spending data increased more in April than in March. April’s 0.8% increase in personal spending was 0.3% higher than expected, per Bloomberg.
An update on durable goods orders also delivered a surprise. April’s preliminary reading showed an increase of 1.1% in durable goods orders, when expectations were for a decline of 1%.
A final reading of the University of Michigan Consumer Sentiment index is also expected on Friday.
Josh is a reporter for Yahoo Finance.
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