Wall Street advances, Treasury yields rise as debt-ceiling debate rolls along

© Reuters. FILE PHOTO: A man walks past an electric monitor displaying Nikkei share average and the Japanese yen exchange rate against the U.S. dollar outside a brokerage in Tokyo, Japan May 2, 2023. REUTERS/Issei Kato

By Stephen Culp

NEW YORK (Reuters) - U.S. stocks slouched to a higher close on Monday, and benchmark Treasury yields rose amid flickering optimism that Washington will get past partisan wrangling and reach a debt ceiling deal.

While all three major U.S. stock indexes ended green, market participants appeared to show little conviction as first-quarter earnings season winds down, leaving few market-moving catalysts, aside from a disappointing Empire State manufacturing report from the New York Federal Reserve.

Surging semiconductor shares boosted the tech-heavy Nasdaq to a solid advance.

Investors had little to focus on, aside from negotiations between President Joe Biden and House Republicans just weeks before the U.S. government could default on its debts.

"It feels like there's some optimism regarding talks on the debt ceiling," said Joseph Sroka, chief investment officer at NovaPoint in Atlanta. "Part of that may be political gamesmanship, but it's helping the market a little bit today."

"You have a split government and those tend to be more 'stand-off' negotiations," Sroka added. "It's getting hyped up a little more than usual."

The Dow Jones Industrial Average rose 47.98 points, or 0.14%, to 33,348.6, the S&P 500 gained 12.2 points, or 0.30%, to 4,136.28 and the Nasdaq Composite added 80.47 points, or 0.66%, to 12,365.21.

European stocks ended the session higher as investors eyed ongoing U.S. debt ceiling negotiations and Turkey's impending election runoff.

The pan-European STOXX 600 index rose 0.25% and MSCI's gauge of stocks across the globe gained 0.41%.

Emerging market stocks rose 0.54%. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.84% higher, while Japan's Nikkei rose 0.81%.

U.S. Treasury yields rose due to lingering worries over slow-cooling inflation even after Atlanta Fed President Raphael Bostic said he would vote to hold interest rates steady if the Fed's monetary policy meeting were held today.

Benchmark 10-year notes last fell 9/32 in price to yield 3.4962%, from 3.463% late on Friday.

The 30-year bond last fell 35/32 in price to yield 3.8392%, from 3.777% late on Friday.

The greenback backed down against a basket of world currencies after touching a five-week high, consolidating gains amid debt limit talks.

The dollar index fell 0.25%, with the euro up 0.23% to $1.0873.

The Japanese yen weakened 0.23% versus the greenback at 136.05 per dollar, while Sterling was last trading at $1.253, up 0.59% on the day.

Oil prices rose, reversing three consecutive sessions of declines as concerns over tightening supplies were exacerbated by wildfires in Alberta, Canada.

U.S. crude rose 1.53% to settle at $71.11 per barrel, while Brent settled at $75.23 per barrel, up 1.43% on the day.

Gold edged higher in opposition to the weakening dollar as the ongoing debt ceiling standoff stoked fears of a global economic slowdown.

Spot gold added 0.2% to $2,015.73 an ounce.