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Index up on hopes for debt ceiling

by SuperiorInvest

Key things

  • Intel leads the Dow higher, followed by Salesforce, Microsoft, Cisco and Apple.
  • American Express rises on Morgan Stanley recommendation.
  • Defensive energy and healthcare stocks fall as AI optimism boosts stocks.

The Dow Jones Industrial Average rose 1.1%, or 350 points, snapping its weekly losing streak as negotiators in Washington hammered out a deal to raise the debt ceiling and excitement over artificial intelligence seeped into markets.

Markets were lifted by hopes that the debt ceiling debate may be approaching resolution. Investors spent mixed personal consumption expenditure (PCE) report it showed that inflation is higher than expected in April, but also an increase in consumer spending and personal income.

Intel (INTC) was the Dow’s best performer, moving 5.5% higher on the day after falling almost as much on concerns that the chip maker is not in a position to take advantage of AI technology. Semiconductor stocks continued to rise after Marvell Technologies (MURLY), following in Nvidia (NVDA) steps, beating earnings estimates and touting AI’s “enormous” business potential.

American Express Stock (AXP) rose 4% after a Morgan Stanley analyst said the stock could rise 20% as a recent selloff put it at an “attractive” entry point.

Microsoft (MSFT) rose 2.1% after Oppenheimer reiterated its top rating on the software giant. Salesforce (CRM) rose 2.6%, while IBM (IBM) and Cisco Systems (CSCO) both increased by 1.7%. apple (AAPL) moved up by 1.4%.

Shares of UnitedHealth Group (UNH) rose 0.8% after Piper Sandler initiated coverage on the stock with an overweight rating. It set a price target of $580, a 21% upside from the stock’s current price.

Walgreens Boots Alliance (WBA) spent most of the day in the red, but rallied to close up 0.1% after the company announced plans to lay off 10% of its corporate workforce.

Healthcare and energy were the only sectors to end the day down. Merck & Co. (MRK) was the Dow’s worst performer, falling 1.1%. Amgen (AMGN) and Johnson & Johnson (JNJ) fell by 0.2% and 0.1%.

Despite its eleventh-hour gains, the Dow failed to match declines earlier in the week when debt ceiling talks stalled. The index ended the week down 1%. But the Nasdaq and S&P 500 got a boost from Big Tech and ended the week in the green, rising 2.5% and 0.4%, respectively.

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