US STOCKS-S&P 500 directionless after Trump's tax-cut bill narrowly wins House vote

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Updates with afternoon trading levels

By Shashwat Chauhan and Kanchana Chakravarty

May 22 (Reuters) - The S&P 500 struggled for direction on Thursday after the U.S. House of Representatives passed President Donald Trump's tax and spending bill, expected to burden the federal government with trillions of dollars in extra debt, by a razor-thin margin.

If what Trump has described as a "big, beautiful bill" becomes law, it is expected to add about $3.8 trillion to the country's $36.2 trillion debt in the next decade, according to the nonpartisan Congressional Budget Office.

The bill now faces a test in the Republican-controlled Senate and will fulfill much of Trump's populist agenda if passed, delivering new tax breaks on tips and car loans and boosting U.S. military expenditure.

"It seems pretty clear that, in its present form, the legislation is certainly not going to improve the budget deficit and could make it substantially worse," said Steve Sosnick, chief market analyst at Interactive Brokers.

Longer-dated Treasury yields hovered near multi-month highs, with those on the 10-year benchmark US10YT=RR at 4.58% and the 30-year Treasury US30YT=RR yield at a new 19-month high.

At 11:46 a.m. ET, the Dow Jones Industrial Average .DJI rose 52.01 points, or 0.12%, to 41,912.45, the S&P 500 .SPX gained 8.17 points, or 0.14%, to 5,852.78, and the Nasdaq Composite .IXIC added 120.56 points, or 0.64%, to 18,993.21.

Eight of the 11 S&P sub-sectors traded lower, with utilities .SPLRCU and energy .SPNY among top decliners, down more than 2% and 1% respectively.

Most megacap and growth stocks inched up. Alphabet GOOGL.O led gains with a 3.3% rise, touching a nearly three-month high.

Shares of solar energy companies including First Solar FSLR.O fell more than 6% as Trump's tax bill is expected to end a number of green-energy subsidies.

Snowflake SNOW.N jumped more than 12% after the cloud computing firm raised its fiscal-year 2026 product revenue forecast.

All three main stock indexes had witnessed their biggest single-day percentage drops in a month on Wednesday as Treasury yields spiked on worries about mounting U.S. debt.

U.S. stocks have had a solid month so far, with the S&P 500 climbing more than 15% from its April lows, when Trump's reciprocal tariffs roiled global markets.

A pause in tariffs, a temporary U.S.-China trade truce and tame inflation data have pushed equities higher, although the S&P 500 is still about 3% off record highs.

Fed Governor Christopher Waller said in an interview to Fox Business that central bank rate cuts would be on the menu if the Trump administration's tariff agenda settles on the lower side of the ledger.

On the data front, U.S. business activity picked up in May, while separate data showed jobless claims dropped last week, suggesting that the economy maintained a steady pace of employment growth.

Traders currently see at least two 25-basis-point rate cuts by the end of the year, according to data compiled by LSEG.

Declining issues outnumbered advancers by a 1.95-to-1 ratio on the NYSE and by a 1.05-to-1 ratio on the Nasdaq.

The S&P 500 posted one new 52-week high and nine new lows, while the Nasdaq Composite recorded 34 new highs and 83 new lows.

(Reporting by Shashwat Chauhan and Kanchana Chakravarty in Bengaluru; Editing by Pooja Desai)

((Shashwat.Chauhan@thomsonreuters.com;))