Wall Street is ticking higher Tuesday in its first trading after Washington struck a tentative deal to avoid a potentially disastrous default on its debt.
The S&P 500 was 0.4% higher in early trading and near its highest level in nine months. The Dow Jones Industrial Average was down 86 points, or 0.3%, at 33,006, as of 9:45 a.m. Eastern time, while excitement about artificial intelligence helped the Nasdaq composite lead the market with a 1.1% gain.
President Joe Biden and House Speaker Kevin McCarthy reached a deal over the weekend to allow the U.S. government to borrow more money, which would allow it to avoid a default on its debt. They now must convince Congress to approve it before the U.S. government runs out of cash to pay its bills, which could happen as soon as Monday.
The wide expectation on Wall Street has been that Washington would reach a deal in the 11th hour because failure would likely mean tremendous pain for the economy and financial markets. Some on Capitol Hill are unhappy about the deal’s details, and Biden and McCarthy are both working to gather votes. The House could vote on the matter Wednesday.
Beyond the drama around the nation’s debt limit, financial markets have also been battling against a long list of concerns. The economy is slowing, inflation is still high and interest rates may be heading even higher, which would further tighten the reins on the economy and financial markets.
The worries are also global, with China’s economic recovery weaker than expected following the relaxation of anti-COVID restrictions.
Still, U.S. stocks have rallied recently after companies reported drops in profit for the start of the year that weren’t as bad as feared. And at the center of it has been Wall Street’s growing frenzy over AI.
Nvidia, whose chips are helping to power the tech world’s newest rush, rose another 5.4% after already more than doubling this year. Last week, it gave a monster forecast for upcoming revenue as it described customers of all kinds racing to apply AI to their businesses.
Nvidia’s surge is pushing its total value closer to $1 trillion, a threshold passed by only the biggest stocks, including Apple.
The huge gains are raising worries about another possible bubble. But evangelists say AI is the next big revolution to reshape the global economy.
Helping to keep the overall market in check were drops for companies in the energy industry. Exxon Mobil fell 1.6%, and Chevron dropped 1.5%. They were following the price of crude oil lower amid worries about demand for fuel.
The strength of the recent recovery for China, the world's second-largest economy, has been particularly troubling.
In the bond market, Treasury yields were easing as fears about a possible default diminish.
The yield on the 10-year Treasury fell to 3.74% from 3.81% late Friday. It helps set rates for mortgages and other loans.
The yield on the two-year Treasury slipped to 4.54% from 4.57%. It more closely tracks expectations for what the Federal Reserve will do.
Traders are bracing for another hike in short-term interest rates from the Fed at its next meeting in two weeks, but the hope is that may be the final one after more than a year of rapid increases.
In markets abroad, European stocks were mixed while indexes were mostly higher in Asia.
AP Business Writers Yuri Kageyama and Matt Ott contributed.
A big-screen adaptation of the anime “Chainsaw Man” has topped the North American box office, beating a Springsteen biopic and “Black Phone 2.” The movie earned $17.25 million in the U.S. and Canada this weekend. “Black Phone 2” fell to second place with $13 million. Two new releases, the rom-com “Regretting You” and “Springsteen — Deliver Me From Nowhere,” earned $12.85 million and $9.1 million, respectively. “Chainsaw Man – The Movie: Reze Arc” is based on the manga series about a demon hunter. It's another win for Sony-owned Crunchyroll, which also released a “Demon Slayer” film last month that debuted to a record $70 million.
The Federal Aviation Administration says flights departing for Los Angeles International Airport were halted briefly due to a staffing shortage at a Southern California air traffic facility. The FAA issued a temporary ground stop at one of the world’s busiest airports on Sunday morning soon after U.S. Transportation Secretary Sean Duffy predicted that travelers would see more flights delayed as the nation’s air traffic controllers work without pay during the federal government shutdown. The hold on planes taking off for LAX lasted an hour and 45 minutes and didn't appear to cause continued problems. The FAA said staffing shortages also delayed planes headed to Washington, Chicago and Newark, New Jersey on Sunday.
Boeing workers at three Midwest plants where military aircraft and weapons are developed have voted to reject the company’s latest contract offer and to continue a strike that started almost three months ago. The strike by about 3,200 machinists at the plants in the Missouri cities of St. Louis and St. Charles, and in Mascoutah, Illinois, is smaller in scale than a walkout last year by 33,000 Boeing workers who assemble commercial jetliners. The president of the International Association of Machinists says Sunday's outcome shows Boeing hasn't adequately addressed wages and retirement benefits. Boeing says Sunday's vote was close with 51% of union members opposing the revised offer.
The stunning indictment that led to the arrest of more than 30 people — including Miami Heat guard Terry Rozier and other NBA figures — has drawn new scrutiny of the booming business of sports betting in the U.S. The multibillion-dollar industry has made it easy for sports fans — and even some players — to wager on everything from the outcome of games to that of a single play with just a few taps of a cellphone. But regulating the rapidly-growing industry has proven to be a challenge. Professional sports leagues’ own role in promoting gambling has also raised eyebrows.
Tesla, the car company run by Elon Musk, reported Wednesday that it sold more vehicles in the past three months after boycotts hit hard earlier this year, but profits still fell sharply. Third-quarter earnings fell to $1.4 billion, from $2.2 billion a year earlier. Excluding charges, per share profit of 50 cents came in below analysts' estimate. Tesla shares fell 3.5% in after-hours trading. Musk said the company's robotaxi service, which is available in Austin, Texas, and San Francisco, will roll out to as many as 10 other metro areas by the end of the year.
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