US equity futures wavered as strong economic data raised the possibility on more interest rate rises, dampening some of the optimism about a potential debt-ceiling deal. Contracts on the S&P 500 traded flat, while the tech-heavy Nasdaq 100 ceded some gains. Treasury yields climbed after the data, reversing earlier declines.
A report on consumer spending painted a picture of a resilient economy, potentially adding impetus to bets that the Federal Reserve has farther to go in bringing inflation back to its target. The personal consumption expenditures price index, one of the Fed’s preferred inflation gauges, rose by a faster-than-expected 0.4% in April.
“We are in a very hesitant market,” said Ariane Hayate, a fund manager at Edmond de Rothschild Asset Management. The debt ceiling is “a factor that adds up nervousness, but the market isn’t expecting that no solution will be found.”
In Washington, Republican and White House negotiators have narrowed differences in talks over recent days and are moving closer to an agreement to raise the debt limit and cap federal spending for two years, according to people familiar with the matter. However, details agreed to are tentative and a final accord is still not in hand, the people said.
Marvell Technology Inc soared in pre-market trading after the chipmaker projected a big revenue jump from artificial intelligence technologies. Gap Inc rallied 13% after reporting better-than-expected results.
European shares also rose, with chipmakers including ASML Holding NV advancing for a second day. Glencore Plc advanced as much as 2.5% after a report that its Viterra unit is in talks to merge with Bunge Ltd, one of the world’s largest crop merchants.
The British pound strengthened after a strong reading of UK retail sales bolstered expectations that interest rates will continue to rise. While S&P 500 futures rose 0.1% in New York, Nasdaq 100 futures gain 0.2% and futures on the Dow Jones Industrial Average also climb 0.1%.
The Stoxx Europe 600 rose 0.5% and the MSCI World index also surges 0.2%. The Bloomberg Dollar Spot Index fell 0.2% and the euro rose 0.1% to $1.0737. While the British pound rose 0.4% to $1.2367, the Japanese yen was little changed at 140.16 per dollar.
The yield on 10-year Treasuries was little changed at 3.82% and Germany’s 10-year yield was little changed at 2.53%. Britain’s 10-year yield declined three basis points to 4.35%.