The Nasdaq, where technology stocks are concentrated, led the rise, gaining 2.19% to 12,975.69 points to reach its highest level of the year. The Dow Jones gained 1.00% to 33,093.34 points and the S&P 500 advanced 1.31% to 4,205.45 points.

As the window narrows to avoid a US default, the White House and the Republican opposition continued Friday to forge a compromise.

"We are closer (to an agreement) but it is not done yet," said a source close to the discussions, skeptical about the possibility of an announcement as early as Friday.

The agreement would freeze some spending, but without touching defense and veterans budgets, the New York Times and the Washington Post reported.

"The market has climbed on hope" that Republicans and Democrats "will announce a deal very soon that will avoid default," said Peter Cardillo of Spartan Capital.

Markets have surfed on this optimism and also continued to be driven by the enthusiasm generated by the development of artificial intelligence for technology stocks and those of semiconductor manufacturers.

However, an inflation indicator in the United States surprised by accelerating more strongly than expected in April. The PCE index, the Fed's preferred measure of price increases, rose 4.4 percent year-on-year from 4.2 percent the previous month.

More worryingly, the underlying index, which excludes sectors with volatile food and energy prices, accelerated to 4.7%.

The pause is receding

These strong inflation figures considerably dampen the possibility of a lasting pause in interest rate hikes, as expected by the markets, but the indices did not flinch, remaining focused on the prospect of a political agreement on the debt.

The inflation data "was very disappointing," Cardillo said. "Obviously, price increases remain tenacious and once we applaud an agreement on raising the debt ceiling, we will have to face these macroeconomic data and look at what the Fed will do," the analyst added.

"Today's inflation figure confuses ideas of a pause in rate hikes," Cardillo said as the Fed meets on June 13-14. "It's not completely ruled out, but it will be a short pause and the Fed will revisit the issue in July," he said.

To add to the persistence of inflation, the IMF, which slightly raised its forecast for US growth on Friday to 1.7% in 2023, also warned that core inflation "will remain significantly above the (Fed's) 2% target in 2023 and 2024". The institution thus invites to keep interest rates at a high level between 5.25% and 5.5% "until the end of 2024".

At the quotation, the chipmaker Marvell Technology soared 32.42% to 65.51 dollars after positive comments on the momentum of artificial intelligence. Nvidia, one of the leaders in the sector, in processors dedicated to AI, gained another 2.54% after having garnered more than 24% the day before thanks to ambitious projections for the 2nd quarter.

In a move of sympathy with the semiconductor sector, the manufacturer Broadcom climbed 11.52%. A multi-billion dollar contract was announced Wednesday between Apple and Broadcom to order components to capture 5G, the fifth generation of mobile phones. Apple gained 1.41%.

The struggling ready-to-wear brand Gap soared 12.33% to $ 8.34 after a surprise profit in the first quarter at the cost of restructuring all over the place.

© 2023 AFP