NEW YORK: Wall Street jumped on Friday following progress in negotiations on raising the US debt ceiling, while chip stocks surged for a second straight day on optimism about artificial intelligence.

After several rounds of talks, US President Joe Biden and top congressional Republican Kevin McCarthy appeared to be nearing a deal to increase the government’s $31.4 trillion debt limit for two years, while capping spending on most items, a US official told Reuters.

The Dow Jones Industrial Average was set to end a five-day losing streak, while the Nasdaq Composite Index jumped to its highest level since August 2022.

The Philadelphia Semiconductor Index rose 5.3%, bringing its gain in the past two sessions to almost 13%. Building on recent euphoria related to AI, Marvell Technology Inc jumped 29% after the chipmaker said it would double its annual revenue related to AI.

Investors were closely watching debt ceiling talks as Biden and McCarthy still seemed at odds over several issues heading into the long weekend, with the US stock market closed on Monday for the Memorial Day holiday.

“All the signs point to a deal getting done and this rally being sustained, but if we get through the weekend and we don’t have a deal or it falls apart in some way, then we’re going to wake up Tuesday morning to some pretty material losses,” said Scott Ladner, chief investment officer at Horizon Investments in Charlotte, North Carolina.

Nvidia Corp ‘s stock climbed 1.9%, adding to its 24% gain on Thursday following its blowout forecast.

The S&P 500 jumped 1.20% and was last at 4,201.24 points.

The Nasdaq gained 2.10% at 12,965.14 points, while the Dow Jones Industrial Average was up 0.88% at 33,052.20 points.

Of the 11 S&P 500 sector indexes, eight rose, led by consumer discretionary, up 3.01%, followed by a 2.4% gain in information technology.

Data showed US consumer spending increased more than expected in April and inflation picked up, which could prompt the Federal Reserve to raise interest rates again next month.