Progress in the US debt ceiling talks encouraged a rally on Wall Street for two days in a row. Investors are taking a breather buying shares of US regional banks. Oddly, the market neglected hawkish comments of the Fed’s policymakers. On Friday, the stock market is poised to open on an optimistic note. The question is whether the momentum could last for long.

Thursday was a lucky day on Wall Street. The benchmark stock indices extended their two-day rally and logged new highs. The Dow Jones added 155 points or 0.34%. The Nasdaq displayed the strongest performance and climbed by 1.51%. The S&P 500 closed 0.94% up at 4,198.
The major stock indices traded higher in the New York pre-market. The S&P 500 is expected to trade in the intraday corridor between 4,170 and 4,240.
Stock investors cheered the prospects of the pending deal on raising the US debt ceiling. Optimism in Wall Street was also encouraged by a rosy forecast from Walmart.
The S&P 500 rebounded after an earlier drop. The index found support from the news that Republican House Speaker Kevin McCarthy said that the highly-anticipated deal could be settled by the time of voting in the House of Representatives next week.
Walmart shares jumped by 1.30% as the retail giant reported higher-than-expected profit in the first quarter and upgraded its sales and revenue forecast for 2023.
The burning issue of the debt ceiling overshadowed uncertainty in the Fed’s stance on further policy moves.
The number of US initial unemployment claims contracted more than expected last week. It prices that the labor market remains tense, thus inflation could persist for longer.
The recent economic data indicates a slowdown in the US economy after a series of rate hikes. Oddly, the market anticipated the first rate hikes by the year end, whereas comments by Fed’s policymakers suggest that they are not ready to lower or even suspend raising interest rates in the near future.
Lorie Logan and Philip Jefferson said yesterday that the economy was not losing momentum yet to assure the central bank to suspend the cycle of rate hikes.
Despite hawkish remarks from Fed’s officials, shares sensitive to interest rates grew by 1.03% driven by Synopsys shares which surged by 8.65% in light of the company’s revenue forecast for the second quarter.
Netflix shares appreciated by 0.22% after the streamer had signed up almost 5 million customers for its ad-supported plan in a month.
Shares of chip maker Micron Technology rose by 4.08% as the company plans to invest up to 3.70 billion dollars in Japan in a new facility over the next few years.
Shares of Take-Two jumped by 11.69%, beating estimates for quarterly sales.
On Friday, US stock index futures remained strong on optimism that a deal could be reached over the weekend to avoid a catastrophic default.
S&P 500 futures reached a 15-week high in early trading, while the Nasdaq broke through levels not seen in nine months. The S&P 500 is up 1.8% this week, its best performance since the end of March.
Joe Biden's Democratic negotiators told the President on Friday they are making "steady progress" in the talks with Republicans, echoing Republican Kevin McCarthy's statement.
Despite the optimism about the debt ceiling agreement, investors should beware of uncertainty about what the agreement will entail and its implications for the US economy.

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