Stocks rose in Wednesday’s midday trading session after Tuesday’s selloff as investors remained hopeful that the debt ceiling talks would produce a breakthrough.
The S&P 500 (^GSPC) advanced 0.55%, while the Dow Jones Industrial Average (^DJI) gained 0.62%, or more than 200 points. The tech-heavy Nasdaq Composite (^IXIC) gained 0.57% by midday.
Wall Street has been kept on guard as the White House and congressional leaders try to hammer out a deal to avert an imminent US debt default. A small group of negotiators takes over as President Joe Biden travels to Asia, but he has announced plans to cut short his trip this week.
Treasury Secretary Janet Yellen and others have warned of catastrophic effects on the US economy in the event of a default, which could occur as early as June.
On Wednesday, the yield on 30-year Treasury bonds fell to 3.86%. The yield on the 10-year note rose to 3.56%, while the yield on the two-year note traded at 4.14%. The dollar index strengthened, while gold prices weakened.
“While (House Speaker Kevin) McCarthy has said a deal is possible by the end of this week, the timeline could be by the end of next week before Memorial Day,” he said. JPMorgan’s US market intelligence team wrote on Wednesday.
President Biden plans to stay in touch with McCarthy over the next few days. Any breakthrough in the talks could impact the markets, the team said.
“With that in mind, stocks may trade in a tight range until an outcome is seen with the greatest downside risk ahead if we enter Memorial Day weekend with no solution, given the X date of early June,” the JPMorgan team added.
Elsewhere on the housing front, U.S. housing starts rose 2.2% in April to an annualized 1.4 million units, government data showed Wednesday. On an annual basis, this still represents a decline of 22.3%. Single-family housing starts rose 1.6% month-over-month to the highest level of 2023.
Building permits issued fell 1.5% to 1.41 million annualized units in April and were down 21.1% year-over-year as multi-family permits issued fell by 9.7% month-over-month.
Also on the agenda were earnings releases from retailers including Target (TGT) and The TJX Companies, Inc. (TJX) before Wednesday’s bell, which provided additional insight into consumer health and a gauge of the likelihood of recession.
Target (TGT) beat Wall Street earnings expectations, but struck a cautious tone with consumers seen as hesitant on discretionary spending. The retailer guided second-quarter earnings below analysts’ estimates, dampening its view of the back-to-school shopping season. Shares gained more than 1% on Wednesday.
Meanwhile, The TJX Companies, which owns TJ Maxx, Marshalls and Home Goods, posted a better first-quarter result, while offering a disappointing forecast. Shares fell slightly on Wednesday.
In single-stock moves, shares of Tesla, Inc. (TSLA) rose more than 3% after the electric vehicle maker held its annual shareholders meeting after the bell on Tuesday. At the event, CEO Elon Musk said he has no plans to step down as CEO and will retain his seat on the board for another term.
Shares of Wix.com Ltd. (WIX) rose more than 1% on Wednesday after the cloud services developer reported first-quarter net profit, boosted by growth in subscription revenue.
Shares of Advanced Micro Devices, Inc. (AMD) rose on Wednesday as Bernstein analyst Stacy Rasgon reiterated her Market-Perform ratings in a Tuesday note and $80 stock forecast for AMD.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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