Pre-Market Pulse 23rd May – Stocks drift lower as US Debt concerns weigh

Overnight – Stocks drift lower as US Debt concerns weigh

Stocks ended flat overnight as dip-buying in tech was kept in check by fragile sentiment amid ongoing concerns over high US debt levels.

Dip-buying in technology stocks, particularly Alphabet, helped stabilize the broader market this week, with Alphabet shares rebounding after a period of underperformance. The positive momentum followed Google’s annual I/O developer conference, where the company showcased a series of artificial intelligence (AI) advancements, including upgrades to its Gemini AI platform, new developer tools, and the rollout of “AI Mode” in Google Search. These announcements were seen as a strategic response to intensifying competition from generative AI rivals, and investors responded favorably, with Alphabet’s stock rising over 3% as optimism grew about the company’s ability to defend its core search business and drive future growth through AI innovation.

Meanwhile, in Washington, the U.S. House of Representatives narrowly passed President Donald Trump’s sweeping tax and spending bill by a 215-214 margin, marking a significant victory for Republican leadership after weeks of internal negotiations and party divisions. The legislation, which now advances to the Senate, seeks to extend the 2017 tax cuts, introduce new tax breaks for tips and car loans, boost defense and border security spending, and implement cuts to key food and health programs for low-income Americans. All Democrats opposed the bill, and several Republican senators have already indicated they will push for substantial revisions, signaling a contentious path ahead in the Senate.

Broader economic concerns continue to influence market sentiment. While initial jobless claims fell slightly last week, pointing to steady job growth, other indicators such as the S&P Global composite purchasing managers’ index have cooled, reflecting a mixed economic outlook. The passage of the tax and spending bill has also reignited debate over the national debt, with nonpartisan analysts projecting that the proposed reductions could add between $3 trillion and $5 trillion to the existing $36.2 trillion debt over the next decade. These fiscal and economic uncertainties, coupled with ongoing trade tensions, remain key factors weighing on investor confidence.