© Reuters. FILE PHOTO: A trader work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 24, 2023. REUTERS/Brendan McDermid
By Shreyashi Sanyal
(Reuters) – U.S. stock index futures rose on Tuesday as lawmakers tentatively agreed to raise the nation’s debt limit to avert a default, while shares of Nvidia (NASDAQ:) led an early rally among chipmakers and AI-related firms.
U.S. President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy on Sunday signed off on an agreement to temporarily suspend the debt ceiling and cap some federal spending.
The U.S. House Rules Committee said it will meet at 3:00 p.m. ET (1900 GMT), to discuss the debt ceiling bill.
A handful of Republican lawmakers have said they will oppose it, in a sign that the bipartisan agreement could face a rocky path through Congress.
Reflecting investor optimism, the cost of insuring exposure to a U.S. debt default fell further on Tuesday, while yields on longer-dated U.S. Treasuries fell. [US/]
“While the initial reaction is likely to be positive, sentiment will be tempered by the fact that the deal is not yet over the line,” said Richard Hunter, head of markets at interactive investor.
Nvidia Corp gained 3.3% in premarket trading after it said on Monday it was building Israel’s most powerful AI supercomputer to meet soaring customer demand for AI applications.
The world’s most valuable chipmaker is on track to breach $1 trillion in market capitalization for the first time.
Shares of heavyweight AI-players including Microsoft Corp (NASDAQ:) and Alphabet (NASDAQ:) Inc rose about 1% each.
Other chipmakers including Advanced Micro Devices (NASDAQ:) Inc, Marvell (NASDAQ:) Technology Inc and Intel Corp (NASDAQ:) added about 3% each.
At 6:53 a.m. ET, were up 60 points, or 0.18%, were up 22.75 points, or 0.54%, and were up 157.25 points, or 1.1%.
Tesla (NASDAQ:) shares advanced 2.8%, on track to extend Friday’s gains.
The company’s top boss, Elon Musk, arrived in China’s capital Beijing on Tuesday, where he is expected to meet senior Chinese officials and visit the EV maker’s Shanghai plant.
Ford Motor (NYSE:) Co added 3.0% after Jefferies upgraded the carmaker’s rating to “buy”.
Even with the overhang of the debt ceiling debate, the and the Nasdaq are set for gains in May amid upbeat earnings and expectations that the Federal Reserve is nearing the end of its tightening cycle.
The S&P 500 closed at its highest level since August 2022 on Friday, notching 4,200 points.
Economic data through the week will also help market participants assess the impact of high interest rates and inflation on the American economy.
May consumer confidence data is due shortly after markets open, while the Labor Department’s closely watched nonfarm payrolls data for May is due on Friday.
