By Stephen Culp
NEW YORK (Reuters) – U.S. stocks were mixed and the dollar reached a seven-week peak on Thursday as discount retail giant Walmart Inc raised its sales outlook and strong economic data calmed recession fears while dampening hopes the Federal Reserve would cut interest rates before year-end.
Investors were closely monitoring the debt ceiling negotiations in Washington for signs that Democrats and Republicans might be inching closer to a deal.
Tech shares boosted the Nasdaq to a healthy gain, and the S&P 500 also rose. Healthcare and financials pulled the blue-chip Dow lower.
Walmart reported better-than-expected quarterly results and hiked its full-year sales forecasts, citing resilient consumer spending and countering this week’s downbeat forecasts from Home Depot Inc and Target Corp.
Optimism about debt ceiling talks ebbed and flowed, with hopes for a deal that avoids a catastrophic default.
“It’s more of the same trepidation are we inching closer to a debt ceiling resolution and traders are tiptoeing through possibility that Washington can get a deal sooner than later,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.
“We have seen this show before, and Washington does not want to have a default right ahead of a major election,” Detrick added. “But for some reason, in the U.S. we do like our drama.”
Data showed fewer-than-expected Americans filed initial jobless claims last week, supporting the likelihood of a “soft landing” but also lowering odds that the Federal Reserve will cut interest rates before year-end.
“Walmart put a nice cherry on top at the end of a solid earnings season for corporate America,” Detrick said.
The Dow Jones Industrial Average fell 72.14 points, or 0.22%, to 33,348.63; the S&P 500 gained 14.56 points, or 0.35%, at 4,173.33; and the Nasdaq Composite added 104.64 points, or 0.84%, at 12,605.21.
European stocks closed higher and the German DAX rose to its highest level since January 2022 on optimism about the U.S. debt ceiling talks.
The pan-European STOXX 600 index rose 0.39% and MSCI’s gauge of stocks across the globe gained 0.25%.
Emerging market stocks rose 0.20%. MSCI’s broadest index of Asia-Pacific shares outside Japan closed 0.26% higher, while Japan’s Nikkei rose 1.60%.
The greenback extended its ascent against a basket of world currencies, reaching a seven-week high, powered by the economic data and debt ceiling hopes.
The dollar index rose 0.69%, with the euro down 0.66% to $1.0767.
The Japanese yen weakened 0.66% versus the greenback to 138.62 per dollar, while Sterling was last trading at $1.2403, down 0.66% on the day.
The 10-year Treasury yield continued to climb, to the highest level since March, following the economic data and hopes for a debt limit resolution.
Benchmark 10-year notes last fell 16/32 in price to yield 3.64%, versus 3.581% late on Wednesday.
The 30-year bond last fell 9/32 in price to yield 3.8949%, versus 3.878% late on Wednesday.
Crude prices dropped as the U.S. economic data spurred the dollar to a two-month high on growing expectations the Federal Reserve could raise interest rates again in June.
U.S. crude dropped 1.33% to settle at $71.86 per barrel, while Brent settled down $1.10, or 1.43%, at $75.86.
Gold moved in opposition to the dollar, with the precious metal losing some luster as the economic data lowered the likelihood of a Fed rate cut before year-end.
Spot gold dropped 1.3% to $1,957.00 an ounce.
(Reporting by Stephen Culp; Additional reporting by Elizabeth Howcroft and Kevin Buckland in London; Editing by Richard Chang and Leslie Adler)