THE GIST (“THE WHAT”)
The S&P 500 index rallied on optimism that the debt ceiling negotiation is progressing towards a deal in order to avert a potentially catastrophic default. A strong rebound in regional bank stocks also fueled the day’s gains. The index closed the session near 2 weeks high at 4158.78, up 48.89 points (+1.19%).
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Markets Celebrating the Obvious?! – Traders’ A.I. (tradersai.com)
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THE DETAILS (The “How & Why”):
Markets rallied after House Speaker McCarthy told reporters that the two negotiating parties could reach a deal by the end of the week to avoid a catastrophic default. President Biden will be leaving for the G-7 Summit in Japan but is expected to cut his trip short and return to Washington to work towards the deal.
Regional banks rebounded sharply from their recent losses led by a 11% rally in Western Alliance on reporting a solid $2 billion growth in its second-quarter deposits. Comerica, PacWest and Zions Bancorp all closed solidly higher by 12.33%, 21.66% and 12.08%, respectively.
Signs of stronger demand ahead of the travel season also pushed airline stocks higher. Delta Air Lines, United Airlines and Alaska Air Group, all closed more than 5% higher. Keysight Technologies was another strong performer of the session, up more that 7% on reporting solid quarterly earnings.
Chip stocks extended their gains, leading the tech sector higher. Nvidia, Applied Materials, Microchip Technology and On Semiconductor Corp, all jumped more than 3% each.
Meanwhile, April housing starts in the U.S. rose unexpectedly by 2.2%. April building permits, however, fell more than expected by 1.5% month-on-month.