US stocks ended Wednesday’s session lower as investors worried about a potential US debt default.
At the close, the S&P 500 (^GSPC) was down 0.73%, while the Dow Jones Industrial Average (^DJI) was down 0.77%, or more than 200 points. The tech-heavy Nasdaq Composite (^IXIC) slipped 0.61%.
In government bonds, the benchmark 10-year yield was slightly higher at 3.74%, while the 2-year yield edged up to 4.36%. and those of the 30-year bond fell to 3.98%.
The deadlock in Washington’s debt ceiling negotiations is taking longer than expected. Speaker Kevin McCarthy reportedly walked out of Tuesday’s meeting, telling his Republican colleagues, “We’re a long way from an agreement.” Just hours earlier, he said in the Oval Office, “I think at the end of the day we can.” find common ground.”
Meanwhile, a senior McCarthy lieutenant said no further meetings were planned, Bloomberg reported. The debt ceiling standoff has raised some fears among investors who have been looking for safe haven assets.
Some believe there’s a chance the House and Senate will vote on a deal next week, just hours before Treasury Secretary Janet Yellen’s “X-date” deadline of June 1.
On Wednesday, Speaker McCarthy announced talks would resume, saying “I think we can make some headway today,” while dismissing suggestions that an agreement is impossible given conservative criticism from Republicans at this point.
“Investors are increasingly concerned that this debt stalemate “could go to extremes” and are bracing themselves for the bumpy road, Deutsche Bank’s Jim Reid and colleagues wrote to clients.
“There has also been talk of whether a short-term extension might now be needed to achieve this, but for the time being Speaker McCarthy has continued to downplay the prospect of that happening. As such, investors remain nervously awaiting and there is no sign of a deal yet,” Reid added.
The story goes on
Regardless, Federal Reserve officials generally agreed that it was less certain that further rate hikes were needed, but were divided on the future. Some members favored further increases, while others expected growth to slow to remove the need for further tightening, according to minutes released on Wednesday.
“The May meeting minutes don’t break any new ground, but we’re a little surprised that ‘several’ FOMC members thought further tightening might not be necessary; we expected only ‘few,'” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics, in a post-release note.
The release of the Fed minutes comes after Federal Reserve Governor Christopher Waller said on Thursday he doesn’t think the Fed should stop raising interest rates until there are clear signs that inflation is cooling.
Elsewhere, stocks are also under pressure from China’s economic recovery, and escalating chip tensions between the US and China may signal more uncertainty.
In individual stock terms, Palo Alto Networks, Inc. (PANW) shares rose more than 7% to hit a 52-week high on Wednesday after the company reported adjusted third-quarter earnings that beat analysts’ expectations lay. The cybersecurity company raised its earnings and revenue guidance for the year.
Toll Brothers, Inc. (TOL) shares rose after the homebuilder’s quarterly profit and sales beat expectations as mortgage rates stabilized and improved buyer confidence boosted demand.
On the retail front, shares in Kohl’s Corporation (KSS) rose after the retailer posted a surprise first-quarter gain, helped by the department store chain’s efforts to reduce inventories amid weak sales.
PacWest Bancorp (PACW) shares fell more than 2% after the bank sold its home loan division. Meanwhile, Citi abandoned its plan to sell its small business and middle-market banking operations in Mexico, opting instead for an IPO, the bank announced Wednesday.
XPeng (XPEV) shares slid more than 5% after the Chinese pure electric vehicle maker posted a sharp drop in sales in the first quarter amid rising competition in China’s electric vehicle market and a uneven recovery in China after sales lifted from the COVID-19 19 logs.
On the earnings front, earnings from eleven Beauty (ELF), Nvidia (NVDA) and Snowflake (SNOW) are out after close Wednesday trading.
_____
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
Click here for the latest stock market news and in-depth analysis, including stock moving events
Read the latest financial and business news from Yahoo Finance
Download the Yahoo Finance app for Apple or Android
Follow Yahoo Finance on Twitter, Facebook, Instagram, Flipboard, LinkedIn and YouTube
Comments are closed.