Stock Market Today: Debt Ceiling Anxiety Weighs on Stocks
While a Monday night meeting between Biden and McCarthy was "productive," there are no signs the two sides are nearing a deal.
Debt ceiling jitters kept stocks in the red today. While President Joe Biden said that Monday night's meeting with House Speaker Kevin McCarthy was "productive" and that "default is off the table," investors have yet to see signs that lawmakers are nearing a resolution.
An unencouraging tweet about the debt ceiling from Punchbowl News only amplified the anxiety, and sent stocks to their lows of the day.
The worry around the debt ceiling comes with the "X"-date just over a week away. On Monday, Treasury Secretary Janet Yellen reiterated that the U.S. could run out of money to cover all of its financial obligations as soon as June 1 if the debt limit isn't raised.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
"Debt ceiling talks are inching forward, but it's slow progress, and with uncertainty hanging in the air, gains on equity markets are being held back," says Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Making matters worse, a mid-afternoon tweet from PunchBowl News saying "the two sides aren't close to an agreement" sent the main indexes to their lows of the day. And while the benchmarks finished off the bottom, the Nasdaq Composite still ended the session down 1.3% to 12,560, the S&P 500 shed 1.1% to 4,145, and the Dow Jones Industrial Average gave back 0.7% to 33,055.
As for today's economic data, S&P Global's flash manufacturing purchasing managers index (PMI) fell to 48.5 in May from April's 50.2, slipping into contraction territory. However, the flash services sector index jumped to 55.1 from 53.6, a 13-month high. Separately, data from the Census Bureau showed new home sales rose 4.1% from March to April, arriving at a seasonal adjusted annual rate of 683,000.
"The data once again points to an economy that is showing resilience not falling off of a cliff," says Michael Reinking, senior market strategist at the New York Stock Exchange.
Apple and Broadcom ink a major supply deal
In single-stock news, Apple (AAPL) said earlier that it signed a multi-year supply agreement with Broadcom (AVGO). Under the terms of the deal, Broadcom will provide Apple with 5G radio-frequency and wireless connectivity components. While AAPL fell 1.5% today, AVGO climbed 1.2%.
On the earnings front, Lowe's (LOW, +1.7%) reported top- and bottom-line beats in its first quarter. However, the home improvement retailer cut its full-year guidance in order "to reflect softer-than-expected consumer demand for discretionary purchases," said Marvin Ellison, CEO of Lowe's, in the company's press release.
"I was pretty impressed with the results given multiple headwinds facing the company, including lumber deflation, unseasonal weather and lower discretionary do-it-yourself purchases," says David Wagner, portfolio manager at Aptus Capital Advisors. And while it's not too surprising the company lowered its guidance like Home Depot (HD) did last week, Wagner is paying attention to "how much longer the consumer can insulate a market that has seen a lot of deceleration elsewhere."
Oil stocks to watch ahead of OPEC+ meeting
Not all of the day's price action was lower. Energy stocks were a pocket of strength Tuesday, with the sector climbing 1.1% as U.S. crude oil futures rose 1.2% to $72.91 per barrel.
Sparking the outperformance were comments from Saudi Arabia's oil minister, Prince Abdulaziz bin Salman, who, ahead of next week's meeting between the Organization of the Petroleum Exporting Countries and its allies (OPEC+), suggested that bearish market speculators should "watch out." Speaking during a panel at the Qatar Economic Forum in Doha, Salman said he keeps "advising that they will be ouching," and that they did "ouch in April" after surprise production cuts from OPEC+ sent oil prices soaring.
The message could "be a sign that the group is considering cutting output once more amid a more bleak global economic outlook," says Craig Erlam, senior market analyst at currency data provider OANDA. This certainly makes oil stocks worth watching next week.
Related Content
-
Is Home Insurance Tax Deductible?With home insurance rates on the rise, you might be hoping to at least claim the cost as a tax deduction. Here's what you need to know ahead of tax season.
-
The December Jobs Report Is Out. Here's What It Means for the Next Fed MeetingThe December jobs report signaled a sluggish labor market, but it's not weak enough for the Fed to cut rates later this month.
-
Trump Signals Plan to Ban Institutional Investors From Buying Single-Family HomesThe president says the move could improve housing affordability. Here’s what the data shows about investor ownership, recent buying trends and what it could mean for homebuyers.
-
Nasdaq Takes a Hit as the Tech Trade Falters: Stock Market TodayThe Dow Jones Industrial Average outperformed on strength in cyclical stocks.
-
Stocks Struggle for Gains to Start 2026: Stock Market TodayIt's not quite the end of the world as we know it, but Warren Buffett is no longer the CEO of Berkshire Hathaway.
-
If You'd Put $1,000 Into Lowe's Stock 20 Years Ago, Here's What You'd Have TodayLowe's stock has delivered disappointing returns recently, but it's been a great holding for truly patient investors.
-
Stocks End Volatile Year on a Down Note: Stock Market TodayAfter nearing bear-market territory in the spring, the main market indexes closed out the year with impressive gains.
-
Stocks Extend Losing Streak After Fed Minutes: Stock Market TodayThe Santa Claus Rally is officially at risk after the S&P 500's third straight loss.
-
If You'd Put $1,000 Into 3M Stock 20 Years Ago, Here's What You'd Have TodayMMM stock has been a pit of despair for truly long-term shareholders.
-
Santa Claus Rally at Risk as Tech Stocks Slump: Stock Market TodayThe Nasdaq Composite and Dow Jones Industrial Average led today's declines as investors took profits on high-flying tech stocks.
-
The Santa Claus Rally Officially Begins: Stock Market TodayThe Santa Claus Rally is officially on as of Wednesday's closing bell, and initial returns are positive.
