FrankvandenBergh
U.S. stocks edged higher on Wednesday, helped by cautious optimism over the debt ceiling impasse and a jump in shares of regional banks following a positive update by Western Alliance.
The tech-heavy Nasdaq Composite (COMP.IND) was up 0.45% to 12,397.98 points in morning trade, while the benchmark S&P 500 (SP500) was higher by 0.44% to 4,127.91 points. The blue-chip Dow (DJI) rose 0.42% to 33,150.14 points.
Meanwhile, Treasury yields were higher. The longer-end 10-year yield (US10Y) was up 2 basis points to 3.57% while the more rate-sensitive 2-year yield (US2Y) was up 8 basis points to 4.15%.
The major averages had ended in the red in the previous session on worries over the debt ceiling standoff.
“Markets had a slightly tough session yesterday, as robust data and hawkish comments from Fed officials helped drive a selloff across bonds (mostly) and equities (a bit),” Deutsche Bank’s Jim Reid said. “Having said that the market was really waiting for the results of the latest meeting on the debt ceiling between President Biden and congressional leaders starting an hour before the US close.”
U.S. President Joe Biden met for about an hour with House Speaker Kevin McCarthy, Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell and House Minority Leader Hakeem Jeffries.
The White House called the meeting “productive and direct” and reports said that the leaders reached a consensus that defaulting on the debt was “simply not an option.” McCarthy told CNBC that he doesn’t think a default will happen.
The White House also confirmed a report that Biden would cut short his planned trip to Australia and Papua New Guinea and will return to the U.S. on Sunday to oversee more congressional meetings in order to avoid the so-called X-date of June 1.
Turning to the performance of the 11 S&P sectors on Wednesday, eight were trading in the green, led by Consumer Discretionary and Energy.
Financials added +1% as regional banks advanced after Western Alliance (WAL) on Tuesday said its quarter-to-date deposit growth had exceeded $2B, calming wider fears over huge outflows. Lenders such as Comerica (CMA), Zions (ZION) and KeyCorp (KEY) were among the top percentage gainers on the S&P 500 (SP500) on Wednesday.
On the economic calendar, April housing starts and building permits came in. Building permits fell 1.5% M/M to 1.416M which was below the consensus figure of 1.437M. Housing starts came in at +2.2% M/M to 1.401M, slightly above the estimated 1.400M number.
“The rise in April starts is more or less evenly split between single- and multi-family units, broadly in line with the levels implied by previously-granted permits,” Pantheon Macro’s Kieran Clancy said. “The small decline in April building permits, meanwhile, is entirely due to a 7.7% slump in the multi-family component, which is prone to wild swings month-to-month but has been trending sideways for over a year.”
Among active movers, Wynn Resorts (WYNN) was one of the top S&P percentage gainers after Barclays upgraded the stock on the potential for pent-up demand for the casino company’s services.
Target (TGT) shares were higher despite the retailer signaling a tougher sales environment ahead.