S&P 500 jumps nearly 1% Thursday for highest close since August as traders hope for debt ceiling resolution: Live updates

Alex Harring
Hakyung Kim

The S&P 500 and Nasdaq Composite jumped on Thursday to notch their highest closing levels since August 2022 as Wall Street traders kept focused on debt ceiling negotiations.

The major averages ticked higher into the end of the trading session, with the broad-market index adding 0.94% to end at 4,198.05. The Dow Jones Industrial Average finished up 115.14 points, or 0.34%, to close at 33,535.91 after trading down for most of the session. The tech-heavy Nasdaq gained 1.51% to finish at 12,688.84. The day marked a second consecutive positive session for the major averages.

Thursday's advance boosted weekly gains for the indexes. The Nasdaq has led the charge up, on pace to end the week 3.3% higher. The S&P 500 and Dow are poised to end the week up 1.8% and 0.7%, respectively.

House Speaker Kevin McCarthy said Thursday that he's optimistic congressional negotiators could reach a deal in time for a House vote next week.

"I see the path that we can come to an agreement," McCarthy said. "And I think we have a structure now and everybody's working hard, and I mean, we're working two or three times a day, then going back getting more numbers."

His comments come with just two weeks until June 1, which is the earliest day the U.S. could default, according to Treasury Secretary Janet Yellen. Jeff Kilburg, CEO of KKM Financial, said traders have been able to "look through" some of the drama surrounding the debt ceiling negotiations.

"I think the debt ceiling is personally a lot of noise, but I think investors and even traders are having a hard time ignoring," Kilburg said. "I have optimism on the market, but also optimism that we're going to find a way to move forward. The U.S. government's never truly going to walk away from their default."

Retail giant Walmart helped the market, adding 1.3% on the back of its strong financial report. The company beat Wall Street forecasts on both earnings per share and revenue in its first quarter and raised its expectations for full-year performance.

But investors' sentiment was reined in somewhat after Dallas Fed President Lorie Logan said the latest economic data doesn't argue for a pause in rate hikes yet. She noted the June policy decision will be based on inflation and employment data that hasn't been released yet.

"As financial markets have been obsessing about the state of debt ceiling negotiations, the airwaves have also hosted an onslaught of Fed speakers, who have seemingly been tasked with sending a message to the markets," said Quincy Krosby, chief global strategist at LPL Financial. "The message, that the Fed, at this point, has no plans to cut rates this year, but now also introducing the possibility that another rate hike could be forthcoming at the June 13-14 meeting."

Lea la cobertura del mercado de hoy en español aquí.

Thu, May 18 2023 4:03 PM EDT

Stocks close higher

Stocks closed higher for a second straight day.

The S&P 500 added 0.9%, while the Nasdaq Composite gained 1.5%. The Dow finished up 0.3% after trading down for much of the session.

— Alex Harring

Thu, May 18 2023 3:50 PM EDT

Nasdaq Composite performance eerily reminiscent of TMT bubble, Wolfe Research says

There are eerie parallels between the recent performance of the Nasdaq Composite Index and its behavior in the aftermath of the Tech/Media/Telecom bubble that topped out in March 2000, Wolfe Research said in a note Thursday.

"Rallies following Nasdaq's peak in March 2000 were not sustained as breadth continued to deteriorate," analyst led by Chris Senyek wrote. As was the case then, sales and earnings at the largest tech stocks leading the market "won't escape the upcoming recession. As such, our sense remains that it won't be different this time."

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Nasdaq vs S&P 500 YTD in 2023

The Nasdaq Composite is ahead almost 21% year-to-date in 2023 versus almost 9% for the S&P 500 and less than 1% for the Dow.

— CNBC's Michael Bloom contributed reporting

Thu, May 18 2023 3:41 PM EDT

Citi names Meta Platforms as top pick among internet companies

Citi listed Facebook-parent company Meta Platforms as the top pick in the North America internet segment, thanks to strong ad products and further investment into language learn models.

"We highlight Meta here, our top pick, with newer ad products like Advantage+, Click-to-Message, and Sponsored Reels delivering ROAS above pre-IDFA levels as engagement ramps," Citi analyst Ronald Josey wrote in a Thursday note.

Meta is set to gain further from a recovery in revenue from ads for internet companies, Josey said, especially as more volatile trends stabilize. Meta stock has been on fire so far this year with a 103.5% gain.

— Brian Evans

Thu, May 18 2023 3:31 PM EDT

Goldman Sachs calls artificial intelligence one of the biggest tailwinds for profit margins over next decade

Artificial intelligence tailwinds could provide a significant lift to profit margins over the next decade, according to Goldman Sachs.

"Artificial intelligence represents the biggest potential long-term support for profit margins," the Wall Street firm said in a recent note to clients. "Our economists' productivity estimates suggest AI could boost net margins by nearly 400 bp over a decade."

Goldman forecasts that widespread adoption should boost U.S. productivity growth by 1.5 percentage points annually over the next decade.

"Based on the historical relationship between productivity growth and corporate profitability, this boost could lift S&P 500 net profit margins by roughly 4 pp over that decade, holding all else equal," Goldman said.

Despite these nearer-term tailwinds, Goldman noted that uncertainties surrounding government policy and widespread adoption linger, denting its ability to project the longer-term impacts of AI on corporate profits.

— Samantha Subin

Thu, May 18 2023 3:24 PM EDT

NYSE advancers lead decliners heading into the close

Advancers at the New York Stock Exchange held a slight advantage over decliners with less than one hour left of trading. About 1,500 NYSE-listed names were higher, while 1,300 others declined.

— Fred Imbert

Thu, May 18 2023 3:19 PM EDT

Carl Icahn says he made a mistake betting against the market, the FT says

Longtime investor Carl Icahn admitted to the Financial Times that he made a mistake by betting against the market, which cost him billions of dollars.

The activist investor has lost nearly $9 billion in a bearish bet or hedging position that stretched back to 2017, according to the FT's analysis based on regulatory filings.

"I've always told people there is nobody who can really pick the market on a short-term or an intermediate-term basis," Icahn told the FT. "Maybe I made the mistake of not adhering to my own advice in recent years."

— Yun Li

Thu, May 18 2023 3:00 PM EDT

S&P 500 and Nasdaq Composite remain up heading into final hour of trading

The S&P 500 and Nasdaq Composite stayed up as investors entered the final hour of trading.

The S&P 500 added 0.4%, while the Nasdaq was on pace to finish 1% higher. The Dow was down 0.2%.

— Alex Harring

Thu, May 18 2023 2:31 PM EDT

Consumers are spending on essentials and looking for value, says Dana Telsey

Consumers are all about spending on essentials and finding value, which helped Walmart's latest earnings, Telsey Advisory CEO Dana Telsey told CNBC. The big box retailer posted an earnings and revenue beat for the first quarter and raised its guidance for the full year.

Not only does 60% of its sales come from groceries, but Walmart also benefited from consumers trading down from brands to less expensive options, she said in an interview with "Squawk on the Street."

"You look at the value that they're offering, you look at the convenience of the locations, what they've done with digital, it all wrapped up very nicely," Telsey said.

This earnings season has also shown that consumers are returning to stores and spending money on food and experiences, like travel, she added.

— Michelle Fox

Thu, May 18 2023 2:03 PM EDT

Roundhill Investments launches ETF focused on generative AI

As generative artificial intelligence grows in popularity, Roundhill Investments is launching an exchange-traded fund for investors looking to play the trend.

The actively-managed ETF, known as the Roundhill Generative AI & Technology ETF (CHAT), holds a slew of names that have benefited from recent AI tailwinds. Top holdings include popular chipmaker Nvidia, Advanced Micro Devices, Alphabet, Microsoft and C3.ai.

— Samantha Subin

Thu, May 18 2023 1:40 PM EDT

Charles Schwab stock is a buy ahead of expected summer turbulence, Deutsche Bank says

Deutsche Bank reiterated a buy rating on Charles Schwab stock on Thursday, noting the company can hold up against a more challenging macroeconomic backdrop.

"We are encouraged by the recent improvement in the pace of balance sheet deposit decline at SCHW, with client cash sorting continuing to moderate. The pace of core balance sheet deposit decline in April was better than our forecast," Deutsche Bank analyst Brian Bedell said.

Liquidity concerns in the broader banking sector has put pressure on Schwab stock which has lost about 38.5% from the start of 2023.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Thu, May 18 2023 1:23 PM EDT

Roughly half of Nasdaq-100 names still 20% or more from their 52-week highs

There are 51 stocks in the Nasdaq-100, or roughly half, that were still off their 52-week highs by 20% or more on Thursday. Electric vehicle makers Rivian and Lucid are sitting roughly 67% and 66%, respectively, from their highs. Tesla is off by 44.5%. Amazon has about 20% to go.

Other names that follow include: Enphase, JD.com, Zoom Video, Moderna, PayPal, Zscaler, Crowdstrike, Datadog, Gilead and Costco.

However, 34 names, or about 33% of the index, are within less than 5% of their 52-week highs, including Intuitive Surgical, Nvidia, Netflix, Lululemon and PepsiCo.

Mega-cap tech leads this group. Microsoft and Alphabet are sitting less than 1% from their highs, while Apple and Meta are about 1% off.

— Gina Francolla, Tanaya Macheel

Thu, May 18 2023 12:59 PM EDT

Palantir shares soar 11%, Cathie Wood piles into the stock

Data analytics software vendor Palantir jumped over 11% on Thursday, pushing its month-to-date gains to more than 45%.

Thursday's rally came after disclosure that Ark Invest's Cathie Wood piled into the stock. The popular investor bought 912,193 shares for her flagship Ark Innovation ETF on Wednesday. She also purchased about 350,000 for her two other funds.

Palantir's stock got a boost earlier this month after strong-than-expected quarterly earnings.

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Palantir, 1-day chart

— Yun Li

Thu, May 18 2023 12:35 PM EDT

Stocks making the biggest moves in midday trading

These are some of the stocks making the biggest moves midday:

  • Walmart — Shares of the big box retailer rose slightly after the company reported an earnings and revenue beat for the fiscal first quarter. Walmart also raised its guidance for the full year. However, its adjusted earnings guidance for the fiscal second quarter came in lower than expectations.
  • Bath & Body Works — The retailer's shares jumped more than 9% after its fiscal first quarter earnings topped expectations. The company also raised its guidance for the full year. Bath & Body Works reported adjusted earnings of 33 cents per share, while analysts surveyed by Refinitiv had estimated 26 cents earnings per share. The company's $1.4 billion in revenue came in-line with estimates. 
  • FedEx — Shares of the shipping giant climbed 1.7% in midday trading. Deutsche Bank raised its price target on FedEx stock a day earlier and reiterated a buy rating, citing the potential for the company's June 20 quarterly results to help lift shares on strong forward guidance.

The full list can be found here.

— Hakyung Kim

Thu, May 18 2023 12:23 PM EDT

Information technology and communication services stocks lead S&P 500 higher

Information technology and communication services stocks pulled the S&P 500 into positive territory for the session.

The were the two best performing of the broad index's 11 sectors, with information technology gaining 1.6% and consumer discretionary adding 1.2%. By comparison, the index as a whole is up 0.3%.

Synopsys and Cadence Design Systems led the ascent in information technology, jumping more than 7% and 5%, respectively. Chip-related stocks Micron, Nvidia and Applied Materials were also among the sector's best performers.

Take-Two and Netflix were the top performers in the consumer discretionary sector with gains of more than 12% and 9%, respectively. Netflix's move follows its presentation to advertisers, while Take-Two's came on the back of its earnings report.

Consumer discretionary was the only other sector trading up in Thursday's session, posting a 0.8% advance. Utilities was the worst performing sector on Thursday with a 1% loss, with just one (WEC Energy) of the 30 stocks in the sector above the flatline.

The information technology, consumer services and consumer discretionary sectors are also the top three, in that order, when looking at week-to-date change.

— Alex Harring

Thu, May 18 2023 11:42 AM EDT

Procter & Gamble downgraded by Truist

Truist downgraded Procter & Gamble to hold from buy on Thursday and lowered its price target to $155 from $165 per share.

"We believe the company has done a remarkable job of refocusing its product portfolio, cutting ~$10B of overhead and other costs and improving investor sentiment over the past five years. However, we now believe the current valuation of the stock fully reflects those turnaround efforts," analyst Bill Chappell wrote in a note to clients.

"We just believe that [the] stock will be stock in a holding pattern, with increased downside risk, for the next few quarters," he added.

Shares of Procter & Gamble slid 1.8% on Thursday and are up fractionally for the year.

— Michelle Fox

Thu, May 18 2023 11:16 AM EDT

Netflix shares jump 8%

Netflix's stock popped about 8% on Thursday following the streaming giant's upfront presentation to advertisers.

During the event held Wednesday, the media company revealed that its new ad-supported tier boasts nearly 5 million active monthly users.

Wall Street seemed to broadly view upfront in a positive light, with JPMorgan reiterating its overweight rating, and saying it's becoming "incrementally positive' on shares.

See Chart...
Netflix shares jump

— Samantha Subin

Thu, May 18 2023 10:42 AM EDT

McCarthy says he's optimistic negotiators can reach deal on debt ceiling in time for vote next week

The major indexes took a leg higher after House Speaker Kevin McCarthy said Thursday he's optimisitc congressional negotiators could reach a deal on the debt ceiling in time for a House vote next week.

"I see the path that we can come to an agreement," McCarthy told reporters in the Capitol. "And I think we have a structure now and everybody's working hard, and I mean, we're working two or three times a day, then going back getting more numbers."

— Christina Wilkie

Thu, May 18 2023 10:25 AM EDT

Big Tech, chipmakers help lift Nasdaq Composite

The Nasdaq Composite held onto a 0.5% gain during early morning trading Thursday.

The tech-heavy index got a boost from information technology and communication services stocks, with shares of Amazon and Netflix last up 2% and 8%, respectively. Big technology stocks Microsoft, Apple, Alphabet also moved higher.

Chip stocks offered another leg of support to the Nasdaq, with Nvidia up more than 2%. Micron Technology popped nearly 5% on news that it's helping build chips in Japan. Marvell Technology, Applied Materials and Lam Research both added 2%.

Synopsys and Take-Two Interactive surged 7% and more than 10%, respectively, on the heels of their earnings reports. Software stocks CrowdStrike, Datadog and Workday also gained.

— Samantha Subin

Thu, May 18 2023 10:19 AM EDT

Dow lags in early trading

The Dow was the worst performer of the three major indexes in morning trading with a loss of around 0.2%.

Procter & Gamble, Chevron, Walgreens and UnitedHealth all weighed on the blue-chip average as each dropped more than 1%.

Walmart and Intel helped buoy the 30-stock index with each gaining more than 2%. Shares of Walmart rose after the retail giant beat Wall Street expectations for the first quarter and gave upbeat guidance.

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The Dow's 1-day chart

— Alex Harring

Thu, May 18 2023 10:14 AM EDT

Leading indicators fell 0.6% in April in 'mild recession' sign

The Conference Board's Leading Economic Index declined 0.6% in April, signaling more deterioration in the U.S. economic picture.

Though the index, fell in line with the Dow Jones estimate, it still was indicative of a slowing growth picture and a potential recession ahead.

"Importantly, the LEI continues to warn of an economic downturn this year," said Justyna Zabinska-La Monica, the board's senior manager of business cycle indicators. "The Conference Board forecasts a contraction of economic activity starting in Q2 leading to a mild recession by mid-2023."

The LEI looks at 10 components including jobless claims, manufacturing gauges and financial market benchmarks such as bond yields and the S&P 500.

—Jeff Cox

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