US: Stocks rally on debt limit deal, hopes of rate hike pause

WALL Street stocks closed higher Thursday (Jun 1) on hopes that the US central bank could pause its interest rate hikes, while traders eyed progress on a deal to avert the nation’s first-ever default.

The Dow Jones Industrial Average rose 0.5 per cent to 33,062.36, while the broad-based S&P 500 closed 1 per cent higher at 4,221.09. The tech-rich Nasdaq Composite Index surged 1.3 per cent to 13,100.98.

The moves came after the House of Representatives late Wednesday approved a bill to suspend the nation’s debt limit – key to avoiding a default – and advanced it to the Senate.

Hammered out between US President Joe Biden and Republican leaders, the pact suspends the debt ceiling through 2024, and slightly cuts government spending next year.

On Thursday, investors also took in economic data suggesting the Federal Reserve could have room to hold back on further interest rate hikes in policymakers’ upcoming meeting this month.

A report by the Institute for Supply Management on the manufacturing sector indicated a fall in prices paid last month, providing a boost to a market that “wants to hear good news about inflation,” said Steve Sosnick of Interactive Brokers.

SEE ALSO

US: Wall St opens higher on debt deal cheer

Fed signal for rate pause takes pressure off hot jobs report

Global money is fast chasing alternatives in Asian equities as China anxiety grows

DECODING ASIA

Navigate Asia in
a new global order

Get the insights delivered to your inbox.

The market is also “pricing a much less chance” for interest rate hikes at the next two Fed meetings following comments from central bank officials, he noted, bolstering it further.

While private hiring cooled less than expected in May according to data from payroll firm ADP, “if the market can make the case that we can add jobs and not have inflation, then that’s a good sign,” said Sosnick.

Among individual companies, shares of software firm Salesforce closed 4.7 per cent lower while those of artificial intelligence company C3.ai slumped 13.2 per cent, in a gloomy showing after their earnings reports. AFP