US stocks ended Tuesday’s session lower as investors digest fresh economic data and eye any updates on the debt ceiling standoff.
It was a lackluster session for the stock market: the S&P 500 (^GSPC) fell 0.64%, while the Dow Jones Industrial Average (^DJI) fell over 1% and lost more than 300 points. The tech-heavy Nasdaq Composite (^IXIC) was down 0.18% at the close.
Wall Street awaits signs of movement in the debt ceiling impasse. A meeting between President Joe Biden and Speaker of the House Kevin McCarthy will take place in Washington on Tuesday afternoon.
Treasury Secretary Janet Yellen sounded the alarm ahead of Tuesday morning’s meeting with Congress leaders that “time is running out” to avert economic catastrophe unless the debt ceiling is raised. She also wrote a letter to lawmakers saying it would “pose severe hardship for American families” as the US could default as early as June 1.
Tuesday’s session will be attended by Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell, and House Democrat leader Hakeem Jeffries. It follows a meeting at the White House last week that yielded no breakthrough. Spokesman Kevin McCarthy said Tuesday morning there had been “no progress” in talks overnight before the afternoon meeting.
FILE – Speaker of the House Kevin McCarthy of California (left) listens as President Joe Biden speaks before a meeting on the debt limit in the Oval Office of the White House Tuesday, May 9, 2023 in Washington. One outcome is evident as Biden and Congressmen seek a budget deal to end the debt ceiling standoff: the large government spending of the COVID-era to contain the pandemic and rebuild post-pandemic is giving way to a new fiscal focus on longer-term long-term investment and deficit containment. (` Photo/Evan Vucci, file)
Meanwhile, investors turned their attention to economic data that showed retail sales rose 0.4% in April, just half of Wall Street’s expected growth. Economists polled by Bloomberg were expecting a 0.8% month-on-month rise after a surprise pullback in March.
Separately, US homebuilders’ confidence in the housing sector hit a 10-month high and improved for a fifth straight month in May as limited housing stock helped renew optimism for the sector.
Loretta Mester, President of the Federal Reserve Bank of Cleveland, said Tuesday she doesn’t think the Federal Reserve isn’t at a point where it can keep interest rates stable for a period of time given persistent inflation.
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Yields along the US curve rose, with the 10-year Treasury yield rising to 3.53% while the 2-year yield rose to 4.06%.
Also on Wall Street’s agenda are gains from retailers like Walmart (WMT) and Target (TGT), as well as Chinese tech giants Alibaba (BABA) and Tencent (TCEHY).
Home Depot (HD) thrived, reporting first-quarter earnings that mostly missed estimates, while same-store sales were well below guidance. The home improvement giant lowered its forecast for full-year sales growth. Shares fell more than 2% on Tuesday.
Elsewhere, gold fell below $2,000. The precious metal is gaining popularity as a safe haven asset as the potential for a US debt crisis increases.
“Everyone is extremely confident that there will be no default, but as we get closer to the deadline we will see these risks being priced into the markets, which could support gold,” wrote Craig Erlam, senior market analyst , in an article Note to customers.
In Washington on Tuesday, former executives from Silicon Valley Bank and Signature Bank testified before the Senate.
Former Silicon Valley Bank chief executive Greg Becker told lawmakers on Tuesday that he was rightfully compensated as “unprecedented events” led to the lender’s failure, contradicting claims he had enriched himself while he was ignored risks.
Regional bank stocks were mixed on Tuesday. PacWest Bancorp (PACW) shares fell more than 14%, while Western Alliance Bancorporation (WAL) shares rose more than 2%.
In other single-stock moves, shares of Horizon Therapeutics (HZNP) fell 14% on reports that the Federal Trade Commission plans to file a lawsuit as early as Tuesday seeking to buy Amgen’s (AMGN) $27.8 billion deal of the drug manufacturer to block.
Warren Buffett’s Berkshire Hathaway increased its exposure to Bank of America (BAC) and bought new shares from Capital One (COF), the filings show. The COF was up more than 2% on Tuesday.
Baidu, Inc. (BIDU) shares rose after the Chinese search giant reported first-quarter earnings that beat analyst estimates and lifted revenue by 10%.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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