Thu. 9:29 a.m.: Stock market today: US futures mixed as worries persist over US debt; Germany slips into recession
Trading on Wall Street was mixed early this morning as markets watched for signs of progress on a deal to avert a default on U.S. government debt.
Futures for the Dow were off 0.3 percent and the S&P 500 rose 0.6 percent.
Nasdaq composite futures jumped 1.8 percent boosted by Nvidia, whose shares climbed about 28 percent in premarket after the chipmaker forecast a huge jump in revenue next quarter, mostly on chip demand for AI-related products and services. Nvidia said it expected sales of $11 billion in the current quarter, up from $6.7 billion in the second quarter a year ago.
The U.S. government could run out of cash to pay its bills as soon as June 1 unless Congress allows it to borrow more. The widespread belief on Wall Street is that Congress will come to an agreement at the 11th hour, as it’s done several times before, because a default would benefit no one and could cause tremendous disruptions to the economy and financial markets.
“As the early-June deadline ticks closer, only a concrete resolution may provide the much-needed conviction for markets rather than verbal reassurances, with the lingering risks of a continued impasse still keeping sentiments on a cautious tone,” Yeap Jun Rong of IG said in a commentary.
The stock market has remained mostly resilient. Fear has so far been concentrated in the bond market, where prices have dropped for Treasury bills due to pay out around the date of a possible default.
Interest rates are so high because the Federal Reserve has yanked them up at the fastest pace in decades to try to bring inflation under control. Minutes from the Federal Reserve’s latest meeting showed policy makers are split on whether to keep raising interest rates.
Traders are hopeful just one more hike may be on the way this summer, if any at all. Federal Reserve officials were divided earlier this month on whether to pause their rate hikes at their upcoming meeting in June, according to the minutes of their latest meeting.
European markets declined as Germany slipped into recession after its economy contracted 0.3 percent in the first quarter of the year. The data from the Federal Statistical Office showed a second quarter of contraction, which is one definition of recession.
The figures were a blow to the German government, which last month boldly doubled its growth forecast for this year after a feared winter energy crunch failed to materialize.
In Frankfurt, the DAX lost 0.2 percent, while the CAC 40 in Paris and Britain’s FTSE each gave up 0.3 percent.
Tokyo was one of the few markets that advanced. Investors have been betting on higher returns from Japanese companies , taking advantage of the dollar’s strength against the Japanese yen.
The benchmark Nikkei 225 index advanced 0.4 percent to 30,801.13.
Hong Kong’s Hang Seng sank 1.9 percent to 18,746.92 on worries China’s economic recovery after the government relaxed pandemic restrictions late last year is losing steam. The Shanghai Composite index edged 0.1 percent lower to 3,201.26.
Simmering tensions between China and the United States over technology and security have added to uncertainties for markets in the region.
In Seoul, the Kospi shed 0.5 percent to 2,554.69, while Australia’s S&P/ASX 200 gave up 1.1 percent to 7,138.20. India’s Sensex declined 0.4 percent.
Taiwan’s benchmark Taiex jumped 0.8 percent on gains for major computer chip makers. Taiwan Semiconductor Manufacturing Co., the world’s largest, surged 3.4 percent.
In other trading this morning, benchmark U.S. crude oil fell $1.49 to $72.85 per barrel in electronic trading on the New York Mercantile Exchange. It gained $1.43 on Wednesday, to $74.34 per barrel.
Brent crude, the standard for international trading, slipped $1.38 to $76.85 per barrel.
The U.S. dollar rose to 139.58 yen. The euro fell to $1.0729 from $1.0754.
On Wednesday, the S&P 500 lost 0.7 percent, the Dow dropped 0.8 percent and the Nasdaq composite lost 0.6 percent.