Wall Street mixed amid tentative US debt deal cheer

The Nasdaq has led gains among Wall Street’s main indexes, boosted by shares of Nvidia, amid optimism about lawmakers tentatively agreeing to raise the debt limit of the United States to avert a default.

US President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy on Sunday signed off on an agreement to temporarily suspend the debt ceiling and cap some federal spending.

The US House Rules Committee said it will meet later on Tuesday to discuss the debt ceiling bill.

A handful of Republican lawmakers have said they will oppose it, in a sign that the bipartisan agreement could face a rocky path through Congress.

“The market is cautiously pricing in that the deal has been done,” Thomas Hayes, chairman at Great Hill Capital LLC, said.

Reflecting investor optimism, the cost of insuring exposure to a US debt default fell further on Tuesday, while yields on longer-dated US Treasuries fell.

Nvidia Corp jumped 6.2 per cent to a record as the world’s most valuable chipmaker breached $US1 trillion ($A1.5 trillion) in market capitalisation for the first time.

Shares of heavyweight AI-player Microsoft Corp rose 0.7 per cent.

The Philadelphia SE Semiconductor index gained 2.2 per cent, touching its highest level since February 2022.

The broader S&P 500 technology sector index added 2.0 per cent.

The S&P 500 index hovered near its highest level since August 2022, well above 4,200 points.

“If this AI trend is real, the immediate demand is going to be in chips and computing power… and Nvidia is the poster child for AI at the moment,” Hayes said.

In early trading, the Dow Jones Industrial Average was down 109.41 points, or 0.33 per cent, at 32,983.93, the S&P 500 was up 5.84 points, or 0.14 per cent, at 4,211.29, and the Nasdaq Composite was up 72.89 points, or 0.56 per cent, at 13,048.58.

Five of the 11 major S&P 500 sectors rose within the first hour of trading, with energy stocks down 1.9 per cent.

However, the gains were kept in check by data showing a higher than expected increase in consumer confidence in May, potentially supporting bets that the Federal Reserve may not be done with its rate-hiking regime.

The data arrived before the Labor Department’s closely watched non-farm payrolls data for May on Friday.

Traders are now pricing for a 63 per cent chance of a 25 basis point increase at the Fed’s June 13-14 meeting.

Dow component Chevron Corp fell 1.6 per cent, tracking slipping oil prices.

Tesla shares advanced 4.9 per cent, extending Friday’s gains.

The company’s top boss, Elon Musk, arrived in China’s capital Beijing on Tuesday where he is expected to meet senior Chinese officials and visit the electric vehicle maker’s Shanghai plant.

Even with the overhang of the debt ceiling debate, the S&P 500 and the Nasdaq are set for gains in May.

Advancing issues outnumbered decliners by a 1.32-to-1 ratio on the NYSE and by a 1.61-to-1 ratio on the Nasdaq.

The S&P index recorded 20 new 52-week highs and 12 new lows while the Nasdaq recorded 70 new highs and 28 new lows.