Key Takeaways

Intel leads Dow higher, with Salesforce, Microsoft, Cisco, and Apple following.American Express rises on Morgan Stanley recommendation.Defensive stocks in energy and healthcare fall as AI optimism boosts growth stocks.

The Dow Jones Industrial Average rose 1.1%, or 350 points, breaking its weeklong losing streak as negotiators in Washington closed in on a deal to raise the debt ceiling and excitement about artificial intelligence percolated through markets.

Markets were lifted by hopes that the debt-ceiling debate could be approaching a resolution. Investors digested a mixed personal consumption expenditures (PCE) report that showed inflation running hotter than expected in April, but also a rise in consumer spending and personal income.

Intel (INTC) was the Dow’s best performer, moving higher by 5.5% a day after it fell nearly as much on concerns the chipmaker isn’t positioned to take advantage of AI technology. Semiconductor stocks continued to surge after Marvell Technologies (MRVL), following in Nvidia’s (NVDA) footsteps, beat earnings estimates, and touted AI’s “tremendous” business potential.

Shares of American Express (AXP) rose 4% after a Morgan Stanley analyst said the stock could rise 20% as a recent sell-off had it at an “attractive” entry point.

Microsoft (MSFT) moved up 2.1% after Oppenheimer reiterated its outperform rating on the software giant. Salesforce (CRM) rose 2.6%, while IBM (IBM) and Cisco Systems (CSCO) both ticked up 1.7%. Apple (AAPL) moved higher by 1.4%.

Shares of UnitedHealth Group (UNH) rose 0.8% after Piper Sandler initiated coverage on the stock with an overweight rating. It set a $580 price target, 21% above its current share price.

Walgreens Boots Alliance (WBA) spent most of the day in the red but rallied to close up 0.1% after the company announced plans to lay off 10% of its corporate staff.

Healthcare and energy were the only sectors to end the day down. Merck & Co. (MRK) was the Dow’s worst performer, falling 1.1%. Amgen (AMGN) and Johnson & Johnson (JNJ) fell 0.2% and 0.1%, respectively.

Despite its eleventh-hour rally, the Dow couldn’t make up for drops earlier in the week when debt-ceiling negotiations stalled. The index ended the week down about 1%. The Nasdaq and S&P 500, however, got a boost from Big Tech and finished the week in the green, rising 2.5% and 0.4%, respectively.

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