Global stock markets advance

NEW YORK CITY: Global stock markets advanced on Friday on hopes of progress in negotiations to avert a calamitous US debt default and a continued rally in tech stocks over enthusiasm for firms involved in artificial intelligence (AI).

On Wall Street, the broad-based S&P 500 rose 1.3 percent to 4,205.45, while the Dow Jones Industrial Average posted a more modest 1.0-percent gain to finish the week at 33,093.34.

“The market is rising on the hope that they probably will be announcing very soon that we avert the default,” Peter Cardillo from Spartan Capital Securities told Agence France-Presse (AFP), referring to the negotiations between the White House and Republicans in Congress.

The Nasdaq soared to finish the day up 2.2 percent at 12,975.69, fueled by a continued rally in stocks like Nvidia which stand to benefit from the widespread adoption of AI tools.

European stocks closed with solid gains, and most Asian markets finished the day higher.

According to unconfirmed US media reports, the debt limit would be suspended for two years, while limits would be placed on social spending.

On Thursday, the US president reiterated his pledge that “there will be no default” despite the wrangling, adding that talks with McCarthy, who leads the Republican negotiators, had been “productive.”

Pressure for a deal was ramped up after Fitch placed the country’s AAA-ranked credit on “rating watch negative” owing to the standoff.

Shortly after the US stock markets had closed Friday, US Treasury Secretary Janet Yellen published a letter sent to Congressional leaders warning of a possible US debt default on June 5 if they fail to raise the debt limit, four days later than a previous estimate of June 1.

In another source of concern, data showed the US Federal Reserve’s (Fed) preferred measure of inflation — the personal consumption expenditures index — rose 4.4 percent year on year in April, up from 4.2 percent a month earlier. The core index, excluding volatile food and energy prices, also rose, as did personal income and spending.