News ID: 115413
Publish Date : 24 May 2023 - 23:26

Dow Falls as Debt Ceiling Drama Stretches Into Another Day

NEW YORK (CNBC) - Stocks fell Wednesday as debt ceiling talks pressed on, and the earliest expected date that the U.S. could default drew nearer.
The Dow Jones Industrial Average pulled back by 229 points, or 0.7%. The S&P 500 and the Nasdaq Composite slid about 0.8% and 0.9%, respectively.
Negotiators for both sides are expected to meet again Wednesday morning, according to Reuters.
Treasury Secretary Janet Yellen previously warned lawmakers that a potential default in early June is “highly likely.” While House Speaker Kevin McCarthy said he had a “productive” discussion with President Joe Biden Monday, there were few signs of progress made in negotiations Tuesday.
Even if Washington officials raise the debt ceiling, markets could suffer as the impact likely removes liquidity from broader capital markets, said Bill Merz, head of capital markets research at U.S. Bank Wealth Management. That’s because the Treasury will need to issue a lot of debt to replenish its general account, he said.
“Especially more recently, [that] has really overlapped with, or it has correlated with, S&P 500 in general stock performance,” Merz added.
On the economic front, investors await minutes from the Federal Reserve’s meeting earlier this month slated for release Wednesday afternoon.
The tail end of earnings season stretched on with Kohl’s and Abercrombie & Fitch popped more than 12% and 21%, respectively, after posting surprise profits. Semiconductor giant Nvidia post results Wednesday after the bell.