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US markets end higher amid optimism about debt ceiling deal

18 May 2023 Evaluate

The US markets ended higher with notable gains of over a percent on Wednesday reflected optimism lawmakers will eventually reach an agreement on raising the U.S. debt ceiling following Tuesday's meeting between President Joe Biden and top congressional leaders. A statement from the White House described the meeting as productive and said Biden is optimistic that there is a path to a responsible, bipartisan budget agreement. Biden directed staff to continue to meet daily on outstanding issues, with the president cutting short an upcoming overseas trip to ensure Congress takes action by the June 1st deadline to avert default. Also, regional banks helped lead the rebound on Wall Street, with shares of Western Alliance (WAL) spiking by 10.2 percent after the company said deposit growth for the current quarter exceeded $2 billion as of May 12.

On the economic data front, the Commerce Department released a report unexpectedly showing a significant rebound in new residential construction in the month of April. The report said housing starts jumped by 2.2 percent to an annual rate of 1.401 million in April after plunging by 4.5 percent to a revised rate of 1.371 million in March. Street had expected housing starts to drop to an annual rate of 1.405 million from the 1.420 million originally reported for the previous month. Meanwhile, the Commerce Department said building permits slumped by 1.5 percent to an annual rate of 1.416 million in April after tumbling by 3.0 percent to a revised rate of 1.437 million in March. Building permits, an indicator of future housing demand, were expected to climb to a rate of 1.430 million from the 1.413 million originally reported for the previous month.

Dow Jones Industrial Average rose 408.63 points or 1.24 percent to 33,420.77, Nasdaq added 157.51 points or 1.28 percent to 12,500.57 and S&P 500 was up by 48.87 points or 1.19 percent to 4,158.77.

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