U.S. Stocks Turn Lower After GOP Halts Debt Ceiling Talks
Stocks moved mostly higher in early trading on Friday but have moved back to the downside over the course of the session. The major averages have pulled back well off their highs of the session and into negative territory.
Currently, the major averages are off their worst levels but still in the red. The Dow is down 85.70 points or 0.3 percent at 33,450.21, the Nasdaq is down 39.12 points or 0.3 percent at 12,649.72 and the S&P 500 is down 6.18 points or 0.2 percent at 4,191.87.
The downturn on Wall Street came as Republican negotiators walked out of a meeting over raising the U.S. debt ceiling, offsetting recent optimism about an impending deal.
“Until people are willing to have reasonable conversations about how you can actually move forward and do the right thing, then we’re not gonna sit here and talk to ourselves,” Rep. Garret Graves, R-La., told reporters.
Graves, who is House Speaker Kevin McCarthy’s, R-Calif., lead negotiator on the debt limit, added, “We’ve decided to press pause, because it’s just not productive.”
Even with the U.S. potentially facing default as soon as June 1st, Graves said he did not know if talks would resume this weekend.
The latest developments come after McCarthy and President Joe Biden had both recently expressed optimism about reaching an agreement.
Renewed concerns about the debt ceiling have largely overshadowed remarks by Federal Reserve Chair Jerome Powell, who participated in a panel before a monetary policy conference earlier today.
Citing recent turmoil in the banking sector, Powell suggested interest rates “may not need to rise as much as it would have otherwise to achieve our goals.”
However, Powell noted inflation remains too high and stressed the Fed would be “steadfast” in pursuit of its goal of bringing inflation down to its 2 percent target.
Airline stocks have moved sharply lower over the course of the session, dragging the NYSE Arca Airline Index down by 1.7 percent. The index is pulling back further off the two-month closing high set on Wednesday.
Significant weakness has also emerged among housing stocks, with the Philadelphia Housing Sector Index falling by 1.6 percent after reaching its best intraday level in well over a year in early trading.
Retail and banking stocks have also moved to the downside as the day has progressed, while some strength remains visible among pharmaceutical and biotechnology stocks.
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index advanced by 0.8 percent, while Hong Kong’s Hang Seng Index tumbled by 1.4 percent.
Meanwhile, the major European markets all moved to the upside on the day. While the U.K.’s FTSE 100 Index edged up by 0.2 percent, the French CAC 40 Index and the German DAX Index climbed by 0.6 percent and 0.7 percent, respectively.
In the bond market, treasuries have climbed well off their worst levels but continue to see modest weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 2.3 basis points at 3.671 percent.
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