Stock Market Today: Stocks Turn Lower Amid Debt Ceiling Setback
The major indexes swung lower Friday after lawmakers reached an impasse in debt ceiling negotiations.
Stocks opened higher Friday but quickly reversed course after news emerged that Republican lawmakers and White House officials had reached an impasse in debt ceiling negotiations. These headlines overshadowed a relatively dovish speech from Federal Reserve Chair Jerome Powell, with the three main benchmarks ending the day in the red.
Heading into today, stocks had scored back-to-back wins as lawmakers expressed optimism that a deal could be made on the debt limit. But today, Republican negotiators said recent talks were unproductive, with House Speaker Kevin McCarthy indicating spending levels were a major sticking point.
"Markets quickly sank this morning after Republican lawmakers stepped away from the negotiation table, with GOP Representative Garret Graves claiming the White House team was being unreasonable," says José Torres, senior economist at Interactive Brokers. Despite upbeat comments from political party leadership in recent days, "negotiators appear far apart in reaching a compromise," Torres adds.
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.
Also in focus was a late-morning speech from Federal Reserve Chair Jerome Powell. While Powell said the central bank is committed to bringing inflation down to its 2% target, he added that "the risks of doing too much versus doing too little are becoming more balanced." As such, the Fed "can afford to look at the data" as it decides how to proceed with future monetary policy.
Powell also said that interest rates might not have to go much higher after the recent regional banking crisis created tighter lending conditions, which could, in turn, slow the economy. The CME FedWatch tool is currently indicating an 80% chance the central bank will pause its rate hikes at the next Fed meeting in June.
Regional bank stocks stumble
Elsewhere, regional bank stocks tumbled after a CNN report suggested Treasury Secretary Janet Yellen told a group of CEOs that more consolidation is needed within the banking industry. PacWest Bancorp (PACW, -1.9%), Zions Bancorp (ZION, -1.7%) and Western Alliance (WAL, -2.4%) were among those closing lower.
As for the major indexes, the Dow Jones Industrial Average fell 0.3% to 33,426, the S&P 500 shed 0.1% to 4,191, and the Nasdaq Composite gave back 0.2% to 12,657.
Debt ceiling, Nvidia earnings in focus next week
So what's in store for next week? It will be a busy one, that's for sure. The debt ceiling will stay top of mind for investors. Treasury Secretary Janet Yellen said earlier this month that the U.S. could default on its financial obligations as early as June 1 if the debt limit is not raised, and that date is now less than two weeks away.
There is also an onslaught of economic data set to be released – including several updates on manufacturing activity – and a number of speeches from Fed officials. The next Fed meeting is slated for mid-June, so investors are anxious for clues on what the central bank intends to do with interest rates going forward. And the earnings calendar has plenty of notable names to be aware of, including Nvidia (NVDA). While the chipmaker is often seen as one of Wall Street's best semiconductor stocks, updates on its AI initiatives are what investors will be watching for.
-
S&P 500 Tops 7,000, Fed Pauses Rate Cuts: Stock Market TodayInvestors, traders and speculators will probably have to wait until after Jerome Powell steps down for the next Fed rate cut.
-
The Met Opera May Sell Its Iconic Paintings. Is it a Good Investment?Buying the Marc Chagall murals would come with a big stipulation attached.
-
Do You Really Need All Those Phone Plan Perks?Unlimited data plans now come bundled with streaming, travel perks and device deals — but many people pay for extras they rarely use.
-
S&P 500 Tops 7,000, Fed Pauses Rate Cuts: Stock Market Today
Investors, traders and speculators will probably have to wait until after Jerome Powell steps down for the next Fed rate cut.
-
Dow Rises 313 Points to Begin a Big Week: Stock Market TodayThe S&P 500 is within 50 points of crossing 7,000 for the first time, and Papa Dow is lurking just below its own new all-time high.
-
Nasdaq Leads Ahead of Big Tech Earnings: Stock Market TodayPresident Donald Trump is making markets move based on personal and political as well as financial and economic priorities.
-
11 Stock Picks Beyond the Magnificent 7With my Mag-7-Plus strategy, you can own the mega caps individually or in ETFs and add in some smaller tech stocks to benefit from AI and other innovations.
-
If You'd Put $1,000 Into UPS Stock 20 Years Ago, Here's What You'd Have TodayUnited Parcel Service stock has been a massive long-term laggard.
-
Dow Dives 870 Points on Overseas Affairs: Stock Market TodayFiscal policy in the Far East and foreign policy in the near west send markets all over the world into a selling frenzy.
-
Small Caps Can Only Lead Stocks So High: Stock Market TodayThe main U.S. equity indexes were down for the week, but small-cap stocks look as healthy as they ever have.
-
How the Stock Market Performed in the First Year of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
