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Daily Market Update: U.S. Stocks Mixed on Tech Strength, Weak Economic Data, and Debt Ceiling Wrangling

Daily Market Update - (Daniel Ang)

On Wednesday, U.S. stocks closed mixed, with tech shares bolstering the Nasdaq, while weak economic data and ongoing debates in Washington over the debt ceiling weighed on the Dow and the dollar. The Q1 GDP number and Personal Consumption Expenditures results, which are the Fed’s preferred inflation gauge, were set to release on Thursday evening.

Key takeaways:
✅ U.S. stocks closed mixed on Wednesday, with the Nasdaq up by 0.5% due to the strength of the tech sector, while the Dow and the dollar were weighed down by weak economic data and ongoing wrangling over the debt ceiling in Washington.
✅ The Dow Jones Industrial Average fell 0.68%, the S&P 500 lost 0.38%, and the Nasdaq Composite rose 0.47%.
✅ The dollar index fell 0.37%, with EUR/USD up 0.58% to 1.1036, USD/JPY up 0.08% to 133.63, and GBP/USD up 0.44% to 1.2462.
✅ Crude oil prices fell due to fears of an economic downturn, with WTI crude down 3.59% to $74.30 per barrel, while Brent was down 3.81% to $77.69 per barrel.
✅ Bitcoin surged to an intraday high of $30,022 before plunging to end the New York session at $28,289.48, up 1.07%, while Ethereum ended at $1865.73, up 0.27%.

Tech shares jumped 1.7%, leading the Nasdaq to gain 0.5%. However, the S&P 500 and the Dow struggled due to weakness in economically sensitive sectors such as industrials and transports, indicating mounting recession fears. Nevertheless, upbeat earnings from Microsoft, Alphabet Inc, and Boeing Co softened the blow of the disappointing economic data, which revealed weakening corporate expenditures on core capital goods. Nonetheless, ongoing congressional debates over raising the federal debt ceiling added to market anxieties.

The Dow Jones Industrial Average fell 0.68% to 33,301.87, while the S&P 500 lost 0.38% to 4,055.99, and the Nasdaq Composite rose 0.47% to 11,584.35.

Benchmark 10-year Treasury yields rose while yields on one-month bills tumbled ahead of a possible vote on the U.S. debt ceiling. Benchmark 10-year notes fell 11/32 in price to yield 3.4391%, from 3.398% late on Tuesday. The 30-year bond fell 28/32 in price to yield 3.7013%, from 3.652% late on Tuesday.

The Dollar softened on signs of an economic slowdown due to weak economic data and ongoing debates over raising the debt limit in Washington. The Dollar Index fell 0.37%, with EUR/USD up 0.58% to 1.1036. USD/JPY rose 0.08% to 133.63, while GBP/USD was last trading at 1.2462, up 0.44% on the day.

Meanwhile, crude oil prices extended their losses as fears of an economic downturn outweighed a larger-than-expected drawdown of U.S. oil inventories. The WTI crude plunged 3.59% to settle at $74.30 per barrel, while Brent settled at $77.69 per barrel, down 3.81% on the day.

Gold prices pulled back from the key $2,000 per ounce level due to ongoing turmoil surrounding the U.S. banking sector. Spot gold dropped 0.5% to $1,987.99/oz.

Bitcoin (BTC) had a volatile session in overnight trading, surging to an intraday high of $30,022 before plunging to end the New York session at $28,289.48, up 1.07%. It then extended its decline to $27,224 in early Asia trading this morning. It was trading at $28,283 at the point of this update. Ethereum (ETH) had a similar rollercoaster ride, ending at 1865.73, up 0.27% last night, and trading at around $1,862.00 at the time of this writing.

Frequently Asked Questions

The debt ceiling is a legal limit on the amount of money the US government can borrow to fund its operations. Congress sets the limit, and if the government reaches the ceiling, it cannot issue any new debt to meet its obligations. This can cause market anxiety as investors become concerned about the government’s ability to meet its financial obligations.

PCE is a measure of the total spending by households on goods and services. It is one of the key metrics used by the Federal Reserve to assess inflation trends and make monetary policy decisions. High PCE can indicate rising inflation, while low PCE can indicate deflationary pressures.

Economically sensitive sectors such as industrials and transports are often seen as leading indicators of economic growth. When these sectors are underperforming, it can suggest that investors are concerned about the state of the economy, including the potential for a recession.

Tech shares jumped on Wednesday due to upbeat earnings from companies such as Microsoft and Alphabet Inc. This helped boost the Nasdaq index, which is heavily weighted towards technology companies.

Gold prices pulled back due to ongoing turmoil surrounding the US banking sector. Investors may be concerned about the impact of bank failures or defaults on the wider economy, which can lead to selling pressure for gold and other safe-haven assets.

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