The Dow Jones Industrial Average recorded a fourth straight day of losses as US lawmakers struggled to agree on the debt ceiling, heightening worries of a possible default.
The Dow fell 255.59 points, or 0.77%, to close at 32,799.92. The S&P 500 lost 0.73% to close at 4,115.24, while the Nasdaq Composite dropped 0.61% to close at 12,484.16.
During a late-morning news conference, House Speaker Kevin McCarthy said negotiators remained in disagreement on spending limits and blamed Democrats for entering the process so late. McCarthy also expressed his confidence that the negotiating teams could make headway on Wednesday.
Due to geopolitical tensions with the United States, Chinese markets were sharply down on Thursday, May 25; in the morning, the Hang Seng lost 2.10%, Shanghai 0.45%, while the Nikkei rose 0.25%, led by Nasdaq futures, up 1.35,% and the S&P 500 (+0.35%). Shares of Nvidia, the world’s leading chipmaker, rallied 25% in premarket Wall Street as growing demand for AI processors beat analysts’ expectations on the sales front.
Gold and oil prices are down 0.3% on the strength of the dollar (1,958 dollars an ounce for gold, 74.12 dollars a barrel for US WTI oil), while the euro and the yen recorded a decrease of 0.15% to 1.0736 and 139.65 respectively. The yield on the 10-year US Treasury bond held steady at 3.79%.
The CEO of Nvidia, the world’s leading semiconductor maker, has warned that the US tech industry could suffer considerable damage as the chip battle between Washington and Beijing escalates. Jensen Huang said in an interview with the Financial Times that US export controls, introduced by the Biden administration to slow Chinese semiconductor production, prevented Nvidia from selling advanced chips in one of the largest markets in the world.
At the same time, Huang pointed out that Chinese companies are developing their chips to compete with Nvidia in gaming, graphic,s, and AI. He concluded that the United States needs to be careful as China represents a very important market for the technology industry.
According to the CME Group, traders in the federal fund’s futures market initially priced in just a 23.4% probability of an interest rate hike at the June 13-14 Fed meeting. However, current projections also point to a maximum 58.3% chance of a decline by the end of the year, with a probability assigned by the central bank to lower the lending rate to a target of between 4.75% and 5%.
According to data from the Federal Reserve Bank of Philadelphia, a regional reading on non-manufacturing activity showed a slight improvement in May. Survey results revealed that regional activity improved from -22.8 to -16 compared to April. However, it’s important to note that this was the survey’s third consecutive negative monthly reading.
Meanwhile, Fitch Ratings announced during the night of May 24-25 that it could lower the rating of the United States due to the worsening political tensions hindering an agreement to resolve the debt ceiling crisis. This news comes after House Speaker Kevin McCarthy expressed optimism that the White House and Republican negotiators could reach an agreement in time to avoid a potentially catastrophic US default.
The comments followed a four-hour meeting between McCarthy and President Joe Biden’s negotiators, stoking hopes that Congress would act before June 1, the date Treasury Secretary Janet Yellen warned the US could run out of funds to pay the debt.
Price lists for Wednesday, May 24, 2023
DOW Jones -0.77% to 32,799.92
S&P 500 -0.73% to 4,115.24
NASDAQ 100 -0.61% to 12,484.16
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