Wall Street Edges Higher to End Best Week Since March

NEW YORK (AP) -- Wall Street is ticking higher Friday as it heads toward its best week since March, despite a long list of worries hanging over it.

The S&P 500 was 0.3% higher in early trading and on pace for a 2.1% gain for the week. That would break a long, listless stretch where it failed to rise or fall by 1% for six straight weeks. The Dow Jones Industrial Average was up 15 points, or less than 0.1%, at 33,551, as of 9:40 a.m. Eastern time, while the Nasdaq composite was 0.3% higher.

Rising hopes that the U.S. government can avoid a disastrous default on its debt have been one of the main engines for the market this week. The White House said Friday morning in Japan that negotiators told President Joe Biden, who's at a Group of Seven summit there, they're making progress on a deal to raise the credit limit for the federal government.

Without the ability to borrow more, the U.S. government could default on its debt for the first time and trigger widespread pain across the economy. The White House and House Republicans are staring down a June 1 deadline, which is when the government could run out of cash to pay its bills.

Better profit reports than feared by big U.S. companies have also helped support stocks in recent weeks, and Deere rose 4% after making more in revenue and earnings last quarter than analysts expected. Unlike many companies on Wall Street, Deere is seeing its profit and revenue grow from year-ago levels.

Ross Stores also reported a rise in its sales and revenue for the latest quarter that topped Wall Street's expectations. But its stock fell 3.5% after it gave a forecasted range for earnings this full year that fell short of some analysts' projections.

Also on the losing side was Foot Locker, which tumbled 24.2%. It lowered its financial forecast for the year because it's having to mark down prices to get shoppers to buy amid what it calls a tough economic environment.

Much scrutiny has been on retailers this week, which also saw Home Depot, Target and Walmart report mixed results. That's because resilient spending by U.S. households has been one of the main pillars keeping the economy from falling into a recession.

Manufacturing and other swaths of the economy have weakened under the weight of much higher interest rates meant to bring down inflation. And the fear is that a drop-off in spending by households could cement a recession.

The pressure is higher after the Federal Reserve yanked its benchmark interest rate to the highest level since 2007. That has helped inflation to cool since setting a peak last summer. But it does that by slowing the entire economy in a blunt action and hurting prices for stocks and other investments.

The hope on Wall Street is that the Fed may take a pause at its next meeting in June, which would be the first meeting in more than a year where it hasn't raised rates. But Dallas Fed President Lorie Logan on Thursday suggested another hike may be on the way unless more data arrives to suggest further cooling of inflation, which remains well above the Fed's target.

Fed Chair Jerome Powell is scheduled to speak later in the morning at an event with a predecessor, Ben Bernanke.

Treasury yields rose as traders become increasingly split on whether the Fed will hike rates again or pause in June. They're now betting on a roughly 40% chance for a hike, up from less than 16% a week ago, according to data from CME Group.

The yield on the 10-year Treasury rose to 3.69% from 3.65% late Thursday. It helps set rates for mortgages and other important loans.

The two-year Treasury yield, which moves more on expectations for Fed action, rose to 4.29% from 4.26%.

Japan's Nikkei 225 rose 0.8% to its highest close in about 33 years. Data on Japan's consumer price index for April showed a rise of 3.4% from the previous year, indicating inflationary pressures were subsiding.

Chinese stocks struggled. Hong Kong's Hang Seng fell 1.4% and Shanghai's index slipped 0.4%. Indexes were modestly higher across Europe.