Wall Street ends higher, dollar climbs on solid data, debt ceiling progress

NEW YORK – United States stocks rallied, and the dollar reached a seven-week peak on Thursday as discount retail giant Walmart raised its sales outlook and strong economic data calmed recession fears while also dampening hopes the Federal Reserve would cut interest rates before year-end.

Investors continued to closely monitor debt ceiling negotiations in Washington for signs that Democrats and Republicans could be inching closer to a deal.

Among the three major US stock indexes, tech shares boosted the Nasdaq to the biggest gain, while healthcare capped the blue-chip Dow’s advance.

Walmart reported better-than-expected quarterly results and hiked its full-year sales forecasts, citing resilient consumer spending and countering this week’s downbeat forecasts from Home Depot and Target.

“Walmart put a nice cherry on top at the end of a solid earnings season for corporate America,” said Mr Ryan Detrick, chief market strategist at Carson Group in Omaha.

Optimism about debt ceiling talks ebbed and flowed, with hopes for a deal that avoids a catastrophic default.

“Traders are tiptoeing through the possibility that Washington can get a deal sooner than later,” Mr Detrick added. “We have seen this show before, and Washington does not want to have a default right ahead of a major election.”

“But for some reason, in the US we do like our drama.”

Data showed fewer than expected Americans filed initial jobless claims on May 13, supporting the likelihood of a “soft landing” but also lowering odds that the Federal Reserve will cut interest rates before year-end.

The Dow Jones Industrial Average rose 115.14 points, or 0.34 per cent, to 33,535.91; the S&P 500 gained 39.28 points, or 0.94 per cent, at 4,198.05; and the Nasdaq Composite added 188.27 points, or 1.51 per cent, at 12,688.84.

European stocks closed higher and the German DAX rose to its highest level since Jan 2022 on optimism about the US debt ceiling talks.

The pan-European STOXX 600 index rose 0.39 per cent and MSCI’s gauge of stocks across the globe gained 0.64 per cent.

Emerging market stocks rose 0.25 per cent. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.32 per cent higher, while Japan’s Nikkei rose 1.60 per cent.

The greenback extended its ascent against a basket of world currencies to reach a seven-week high, powered by the economic data and debt ceiling hopes.

The dollar index rose 0.63 per cent, with the euro down 0.62 per cent to US$1.0772 (S$1.45).

The Japanese yen weakened 0.73 per cent versus the greenback to 138.71 per dollar, while Sterling was last trading at US$1.2408, down 0.62 per cent on the day.

The 10-year Treasury yield continued to climb, reaching its highest level since March, after the economic data and hopes for a debt limit resolution.

Benchmark 10-year notes last fell 19/32 in price to yield 3.6534 per cent, versus 3.581 per cent late on Wednesday.

The 30-year bond last fell 18/32 in price to yield 3.9105 per cent, versus 3.878 per cent late on Wednesday.

Crude prices dropped as the US economic data spurred the dollar to a two-month high on growing expectations the Federal Reserve could raise interest rates again in June.

US crude dropped 1.33 per cent to settle at US$71.86 per barrel, while Brent settled down US$1.10, or 1.43 per cent, at US$75.97.

Gold moved in opposition to the dollar, with the precious metal losing some luster as the economic data lowered the likelihood of a Fed rate cut before year-end.

Spot gold dropped 1.2 per cent to US$1,957.09 an ounce. REUTERS