American investors reacted to the adoption of the BBB bill with mixed feelings

Trading on Thursday began with increased caution amid rising tensions in the government bond market after the US House of Representatives passed a budget consolidation bill early in the morning with a minimal majority (215-214, strictly along party lines).

The document, among other things, provides for an increase in the SALT tax deduction limit to $40,000 (from $10,000), postponement of the deadline for the introduction of employment requirements for Medicaid participants to December 2026 (from 2029) and an increase in the national debt limit by $4 trillion.

The Tax Foundation estimates that the bill will increase GDP by 0.6% in the long run, but will add $3.3 trillion to the budget deficit over the next decade.

After this the yield of 10–year US government bonds briefly rose to 4.63%, and the yield of 30–year bonds rose to 5.15%, which triggered a sell—off in the stock futures. However, the situation stabilized after the publication of data on applications for unemployment benefits: the number of people continuing to receive benefits for the week ending May 10 increased by 36,000 to 1,903 million.

Additional pressure on yields was exerted by the report on sales in the secondary housing market: in April, only 4.00 million transactions were recorded in annual terms, the lowest figure for this month since 2009. By the time the main bond market session ended (2 p.m. ET), the 10–year yield had dropped to 4.55%, and the 30–year yield had dropped to 5.06%.

These improvements were accompanied by a strengthening of the US dollar index to 99.91 (+0.4%) and contributed to the recovery of stock market. The leaders of the recovery were shares of megacorporations and representatives of the growth sector: Alphabet (GOOG 171,98, +1,92, +1,1%), NVIDIA (NVDA 132.83, +1.03, +0.8%) and Snowflake (SNOW 203,18, +24,06, +13,4%) — the latter demonstrated a positive market reaction to the reports and forecasts.

Nevertheless, the main indexes lost most of their daily growth in the last 30 minutes of the session due to the triggered automatic sales programs. Only three sectors ended the day in positive territory — consumer durable goods (+0.6%), communications services (+0.3%) and information technology (+0.1%) — all of which include mega–stocks. The industrial sector remained unchanged, while seven other sectors closed in the red, with losses ranging from 0.1% (materials and finance) to 1.4% (utilities).

Our American FTinvest 11 portfolio also started the day uncertainly moving slightly into the red zone. The index hovered was around the zero mark for most of the session, but ended the day with an increase of 0.17%, closing at 731.51.