Nasdaq Hits Highs As McCarthy Eyes House Vote Next Week; Tech Stocks Lead As Fed Officials See Rate Hike To 5.5%

In late afternoon trading on Thursday, the Dow Jones Industrial Average dropped 0.2%. The Dow Jones Industrial Average continued to gain support at its 50-day moving median, but the health leaders of the Dow lagged.

Kevin McCarthy, the House Speaker, said on Thursday that he believes the way to "come up with an agreement" is to raise the debt ceiling. According to experts, the U.S. may default on its debt as soon as June 1, if there is no budget agreement. McCarthy believes the vote could take place as soon as next week.

S&P 500 surpassed the February high of 4,195 with a 0.4% rise. The Nasdaq rose 1%, and reached a new high for the current year.

The tech leaders Nvidia, Lam Research (LRCX), Cadence CDNS and ASML ASML rose. Nvidia, ASML and Lam Research are IBD Leaderboard stock while Cadence and Lam are IBD SwingTrader candidate.

Applied Materials (AMAT), which is due to report earnings at the end of the day, rose. The stock price broke out at 125.72 on Wednesday.

The volume on the NYSE was higher than the same time Wednesday.

The Russell 2000 small-cap index dropped 0.1%.

Crude oil continues to fall, trading at $71,80 per barrel. The yield on the benchmark 10 year Treasury note increased 5 basis points to 3.63 percent.

Fed governors commented on the possibility of a rate hike in June.

Lori Logan, Dallas Fed president, says that she has not yet found enough data to justify a pause in rate hikes. Loretta Mester, Cleveland Fed president, maintained that the economy was not in a position where it would be justified to hold rates steady. CME FedWatch Tool predicts that there is a 35.6% probability of a 25 basis point increase in June. This would bring the effective rate up to 5.5% to 5.25%.

Dow Jones Leaders In Focus

Walmart (WMT), a component of the Dow Jones, rose in value after its same-store sales grew faster than expected. The company has also increased its earnings forecast for the full year to $6.10 to $6.2 per share. According to IBD MarketSmith's chart analysis, shares are in a buying zone that extends up to 155.75.

Cisco Systems (CSCO), the tech leader, pared its early losses and remained flat despite strong profits. Weaker orders during the third fiscal quarter raised concern. Stocks closed Thursday above the 200-day moving median.

Alibaba (BABA), outside Dow Jones, fell below the converged 50 and 200 day lines after disappointing earnings. Cloud Intelligence Group was spun off by the Chinese ecommerce platform through a stock distribution to its shareholders. Cainiao Smart Logistics and Freshippo, its retail operation, are also scheduled to be listed on the public market.

Take Two Software (TTWO), after earnings, broke out to 137.53. The video game publisher expects to see strong growth with net bookings reaching $8 billion by fiscal 2025.

Synopsys, a company outside Dow Jones (SNPS), also broke from a flat basis at 392.89 following earnings. The chip design software manufacturer also increased its full-year guidance.

Netflix (NFLX), the streaming giant, broke free of a cup handle for 349.90 dollars after it announced that its platform was now used by 5 million people each month.

IBD Leaderboard: Software automation leader Dynatrace is a strong option player. After a good earnings report on Wednesday, Dynatrace broke through DT's cup base to reach 48.10.

Initial unemployment claims decreased to 242,000 from 264,000 the previous week.