2023-05-17 22:48:53
Approaching the solution to the debt ceiling crisis, US stocks climbed… and the Dow Jones jumped more than 400 points
The tone of optimism rose in Washington on Wednesday, following signs of an imminent agreement to raise the US debt ceiling appeared, so Wall Street rebounded, and the main stock indices ended the day in the green, in which the Dow Jones Industrial Average jumped 408 points at once.
During trading on Wednesday, and supported by the words of US President Joe Biden before boarding his plane to Japan to attend the G7 meetings, in which he affirmed that the United States will not default on paying its debts, the gain points for the Dow Jones Industrial Average represented 1.24% of its value at the beginning of the day. While the S&P 500 rose by 1.19%, the gain in the Nasdaq index was 1.28%.
With increases on Wednesday, the world’s most famous index came close to erasing the month’s losses, which exceeded 2%, of which 1% was recorded on Tuesday, following the White House negotiations and leaders of two congressional parties ended without announcing an agreement.
Also on Wednesday, regional bank shares recovered, and their exchange-traded fund jumped more than 7%.
In Europe, stocks closed lower, as concerns regarding the ability of the US to avoid default on its obligations weighed on sentiment, coupled with a slew of grim corporate data.
The Stoxx 600 European stock index ended the day’s trading down 0.2%, and the shares of food and beverage companies, utilities and real estate were the most affected.
“We still have time to go before the deadline (before the US treasury runs out of money) and there are hopes that some kind of agreement can be reached over the weekend,” Chris Beauchamp, market analyst at IG Group, told Archyde.com.
He added, before Biden’s optimistic words reached the markets: “This will affect the US markets first, then the European markets will follow suit, and this is what we expect for the second half of May, which is not a good month for stocks at all.”
Germany’s Commerzbank fell 3.8% on Wednesday, following its estimate of net interest income for the full year missed analysts’ expectations.
UBS Group shares rose 1.1% following the Swiss bank said it expected financial damage of $17 billion from its takeover of Credit Suisse, but also expected exceptional gains of $34.8 billion.
In connection with the matter, oil prices rose regarding two dollars a barrel, as optimism regarding oil demand and negotiations to raise the US debt ceiling overshadowed concerns regarding supplies.
Brent crude futures rose $2.05, or 2.7%, to $76.96 a barrel, and US West Texas crude rose $1.97, representing 2.8%, to $72.83, upon settlement.
Jim Ritterbusch, president of Ritterbusch & Associates in Galena, Illinois, USA, said, “Today’s strong oil dealings are all related to expectations of an agreement to (raise) the public debt ceiling, most likely by the end of this week, which apparently lifted a negative burden on most asset classes, including That oil.”
Archyde.com said that this optimism was overshadowed by the impact of the increase in US crude oil stocks by five million barrels in the week ending May 12, as announced by the US Energy Information Administration today. Analysts had expected, in a Archyde.com poll, a decline of 900,000 barrels.
And the increase in crude stocks reinforced concerns regarding growth in the United States, following data showed that retail sales rose 0.4% in April, which was below expectations for a 0.8% rise.
Yesterday, the International Energy Agency expected that demand for oil would exceed supply by two million barrels per day in the second half of the year, and that China would account for regarding 60% of the growth in oil demand in 2023.
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