US stocks rose on Tuesday, bolstered by a rally in artificial intelligence-related stocks and hopes that lawmakers were on track to pass the debt ceiling bill before the June deadline.
Wall Street’s benchmark S&P 500 rose 0.3 percent, after closing at a nine-month high on Friday, while the heavy Nasdaq Composite rose 0.6 percent.
Both were boosted after Nvidia surpassed its $1 trillion market cap after its shares rose 4.8 percent at the market open, becoming the first chipmaker to join the trillion-dollar club, along with companies like Amazon, Apple and Alphabet.
Nvidia has been riding on a wave of enthusiasm across Wall Street for companies expected to benefit from advances in artificial intelligence.
Meanwhile, the pressure on US Treasuries eased as traders expected the US debt ceiling bill, agreed on Saturday, to pass through Congress this week, ahead of the looming deadline for a default.
The yield on policy-sensitive two-year Treasury bills fell 0.07 percentage point to 4.52 percent. The yield on the benchmark 10-year note fell 0.1 percentage point to 3.72 percent. Bond yields fall as prices rise.
The deal between US lawmakers and the White House would raise the country’s debt ceiling of $31.4 trillion for two years until after the next presidential election in late 2024.
For the bill to go into effect, the bipartisan bill needs to be approved by the House and Senate, with merchants set for the first vote in the House on Wednesday.
In Europe, the region-wide Stoxx 600 fell 0.7 percent, the CAC 40 lost 1.1 percent, and the FTSE 100 fell 1 percent.
In foreign exchange markets, the Turkish lira fell to 20.43 Turkish liras against the US dollar, hitting a record low after President Recep Tayyip Erdogan secured victory in the country’s elections over the weekend.
Meanwhile, the Hang Seng China Enterprises Index fell during Asian trading on Tuesday, sending it down 20 percent from its peak in January. This put it temporarily in bear market territory, although it later rose to close at 0.5 percent.
China’s benchmark CSI 300 index of shares listed in Shanghai and Shenzhen also fell more than 10 percent from this year’s peak, matching the technical definition of a market correction, although it later rose to close marginally higher.
The pressure on Chinese stocks follows growing concerns about the future of the world’s second-largest economy as tensions between Washington and Beijing escalate.
The continued sell-off reflects a growing consensus among investors that the country’s economic recovery is losing momentum, nearly half a year after Beijing abandoned President Xi Jinping’s pesky zero Covid-19 policy.
Winnie Wu, China equity strategist at Bank of America, said clients have described many Chinese stocks as “too cheap to short but not good enough to buy.”
Wu said that while Chinese stock valuations have turned attractive, the recovery has remained weaker than expected and the economy is likely to continue to perform poorly without greater support from the state.
