NEW YORK: US stock indexes rose by midday trading on Thursday as investors cheered passage of a bill by lawmakers to suspend the nation’s debt ceiling amid bets that the Federal Reserve will skip raising interest rates in its next meeting.
Investors also looked on economic indicators, including the ADP National Employment Report that showed more-than-expected jobs additions in May, while a separate reading said weekly jobless claims increased modestly, both suggesting the labor market’s resilience.
The bill to suspend the $31.4 trillion debt ceiling headed to the Senate, which must enact the measure before a Monday deadline, when the government is expected to run out of money to pay its bills.
Democratic Majority Leader Chuck Schumer said the Senate will stay in session until members approve the bill.
With signs of progress in the debt ceiling saga, focus will now shift to the Labor Department’s closely watched jobs report for May, due on Friday, that will help determine whether the Federal Reserve will stick with its aggressive interest rate-hiking cycle.
The odds favoring a pause in rate hikes at the Fed’s June 13-14 policy meeting were around 71% after the day’s datasets.
Comments by Fed officials on Wednesday, including governor and vice chair nominee Philip Jefferson, leaning toward a momentary pause in hikes had helped drive down bets for a hike.
“We’re at the potential beginning of a soft landing,” said David Russell, vice president of Market Intelligence at TradeStation.
“When you look at the debt ceiling apparently being resolved, we could be in a situation where we wake up from the nightmare of inflation and the risk of a default to the soft landing.” At 12:14 p.m. ET, the Dow Jones Industrial Average was up 203.11 points, or 0.62%, at 33,111.38, the S&P 500 was up 36.84 points, or 0.88%, at 4,216.67, and the Nasdaq Composite was up 138.93 points, or 1.07%, at 13,074.21.
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