FX.co ★ Wall Street Edges Up

U.S. stock indices experienced an uptick as investors assessed the potential effects of President Trump's recently approved tax and spending legislation, amid growing concerns over the expanding U.S. deficit. The S&P 500 climbed by 0.4% and the Nasdaq by 0.8%, driven by a resurgence in technology stocks and declining bond yields. Meanwhile, the Dow Jones Industrial Average gained more than 150 points. Despite these gains, caution prevailed on Wall Street due to the legislation, which encompasses tax reductions alongside increased defense expenditures, proceeding to the Senate where it could potentially enlarge the national debt, currently standing at $36 trillion, by trillions more. The Congressional Budget Office estimates the bill could cost nearly $4 trillion, heightening fears of fiscal instability. Reflecting this sentiment, the bond markets saw the 30-year Treasury yield momentarily reach 5.14%, its highest level since 2023. The energy and utility sectors faced declines, particularly with solar stocks such as Sunrun experiencing significant drops, while communication services outperformed other sectors. Amid this volatility, S&P Global’s composite Purchasing Managers' Index (PMI) rose to 52.1 in May, indicating a degree of economic resilience, though housing and labor market statistics provided mixed signals.