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Major market averages were mixed on Thursday, with the tech sector riding an AI wave spurred by Nvidia, but debt limit worries are still present.
Early on and the Nasdaq Composite (COMP.IND) was +1%, the S&P 500 (SP500) was +0.3%, while the Dow (DJI) was -0.3%.
Nvidia (NVDA) rallied more than 25% with a huge boost in guidance and bullish comments on demand for chips for AI. (NVDA could see the biggest market-cap single-day rise ever if it can top Apple’s record of $191B.)
Rates are higher. The 10-year Treasury yield (US10Y) rose 4 basis points to 3.76%. The 2-year yield (US2Y) rose 8 basis points to 4.42%.
Fitch placed the U.S. AAA sovereign rating on credit watch negative due to the debt ceiling standoff. Congress will leave town before any vote.
We’ve “seen two stellar auctions in the past couple of days in the 2Y and 5Y T-notes,” ING said. “We don’t see this as a debt ceiling play, as the outcome cuts in the same direction.”
“A resolution means more supply, while no resolution heightens the risk of a buyers’ strike. Both in fact push for upward pressure on yields. So, view the strong bid at auction as value hunters within the rates cycle rather than positioning on the debt ceiling outcome.”
Weekly jobless claims came in at 229K compared to the economists expected rise of 250K.
At the same time, first-quarter GDP revisions came. The headline number was seen at 1.3% versus the expected 1.1%. PCE prices also came in at 5.0% in comparison to the 4.9% consensus figure.
“GDP does not capture the economic wants of the modern world—output economics has evolved into impact economics,” UBS’ Paul Donovan said. “However, the US personal consumption expenditure (PCE) deflator, as an inflation measure, may get market attention in the context of a confused Fed.”
April pending home sales came in at 0% versus the expected 0.5% rise.
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