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Wall Street ended sharply lower on Tuesday, dragged down by tech stocks. The debt-ceiling negotiations continued to result in a policy deadlock after a meeting between President Biden’s staff and House Speaker Kevin McCarthy’s representatives. All three major indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.7% or 231.07 points to close at 33,055.51. Twenty-two components of the 30-stock index ended in negative territory, while eight ended in positive.
The S&P 500 lost 1.1%, or 47.05 points, to close at 4,145.58. Ten of the 11 broad sectors of the benchmark index ended in negative territory. The Materials Select Sector SPDR (XLB), the Technology Select Sector SPDR (XLK) and the Communication Services Select Sector SPDR (XLC) dropped 1.6%, 1.5% and 1.2%, respectively, while the Energy Select Sector SPDR (XLE) gained 1.1%.
The tech-heavy Nasdaq declined 160.53 points, or 1.3%, to finish at 12,560.25.
The fear-gauge CBOE Volatility Index (VIX) was up 7.7% at 18.53. A total of 10.3 billion shares were traded on Tuesday, lower than the last 20-session average of 10.6 billion. Decliners outnumbered advancers on the S&P 500 by a 3.5-to-1 ratio. The S&P 500 recorded three new highs and one new low, while the Nasdaq posted 90 new highs and 70 new lows.
Deadlock Continues After Biden-McCarthy Staff-Level Meet
On Tuesday, a meeting between representatives of President Joe Biden and congressional Republicans on debt ceiling negotiations concluded without any signs of progress, as the deadline to raise the government's borrowing limit on Jun 1 continued to tick closer. The two deeply divided parties continued to differ on how to bring down the federal deficit, with Democrats arguing in favor of more taxes and Republicans wanting further spending cuts. Until this point in the talks, ideological differences between the two major national parties have taken center stage and seem to be the main party spoiler.
Democrats have suggested that they want to freeze spending for the 2024 fiscal year that begins in October at 2023 levels, and that this would represent a spending cut. The idea has been rejected by Republicans, who want spending cuts. Unused COVID relief funds and other public benefit programs aimed at helping Americans out of poverty have also been under scrutiny and on the table. However, no consensus has been arrived at.
While McCarthy told the media that they had very good talks and expects to speak to President Biden over the phone on a daily basis while this crisis rages on, democrat representatives left without making any substantive comments. Hardline Republicans have also raised questions about the Jun 1 deadline, and the basis on which that date is being cited as a crunch day by Treasury Secretary Janet Yellen.
The market, which was hopeful about the negotiations in the past week, now continues to show its weariness for three straight sessions, and continues to price in, albeit cautiously, that an U.S. debt default and a resultant economic turmoil might be in the cards. Technology and Communication Services stocks became the biggest losers on the day, with treasury yields rising. Mega-cap growth stocks usually feel the heat when people rush to the safety of the bond market.
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that New Home Sales for April had increased to 683,000, against a consensus of 658,000. For the prior period, March, the number was revised down to 656,000 from the previously reported 683,000.
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Stock Market News for May 24, 2023
Wall Street ended sharply lower on Tuesday, dragged down by tech stocks. The debt-ceiling negotiations continued to result in a policy deadlock after a meeting between President Biden’s staff and House Speaker Kevin McCarthy’s representatives. All three major indexes ended in the red.
How Did the Benchmarks Perform?
The Dow Jones Industrial Average (DJI) fell 0.7% or 231.07 points to close at 33,055.51. Twenty-two components of the 30-stock index ended in negative territory, while eight ended in positive.
The S&P 500 lost 1.1%, or 47.05 points, to close at 4,145.58. Ten of the 11 broad sectors of the benchmark index ended in negative territory. The Materials Select Sector SPDR (XLB), the Technology Select Sector SPDR (XLK) and the Communication Services Select Sector SPDR (XLC) dropped 1.6%, 1.5% and 1.2%, respectively, while the Energy Select Sector SPDR (XLE) gained 1.1%.
The tech-heavy Nasdaq declined 160.53 points, or 1.3%, to finish at 12,560.25.
The fear-gauge CBOE Volatility Index (VIX) was up 7.7% at 18.53. A total of 10.3 billion shares were traded on Tuesday, lower than the last 20-session average of 10.6 billion. Decliners outnumbered advancers on the S&P 500 by a 3.5-to-1 ratio. The S&P 500 recorded three new highs and one new low, while the Nasdaq posted 90 new highs and 70 new lows.
Deadlock Continues After Biden-McCarthy Staff-Level Meet
On Tuesday, a meeting between representatives of President Joe Biden and congressional Republicans on debt ceiling negotiations concluded without any signs of progress, as the deadline to raise the government's borrowing limit on Jun 1 continued to tick closer. The two deeply divided parties continued to differ on how to bring down the federal deficit, with Democrats arguing in favor of more taxes and Republicans wanting further spending cuts. Until this point in the talks, ideological differences between the two major national parties have taken center stage and seem to be the main party spoiler.
Democrats have suggested that they want to freeze spending for the 2024 fiscal year that begins in October at 2023 levels, and that this would represent a spending cut. The idea has been rejected by Republicans, who want spending cuts. Unused COVID relief funds and other public benefit programs aimed at helping Americans out of poverty have also been under scrutiny and on the table. However, no consensus has been arrived at.
While McCarthy told the media that they had very good talks and expects to speak to President Biden over the phone on a daily basis while this crisis rages on, democrat representatives left without making any substantive comments. Hardline Republicans have also raised questions about the Jun 1 deadline, and the basis on which that date is being cited as a crunch day by Treasury Secretary Janet Yellen.
The market, which was hopeful about the negotiations in the past week, now continues to show its weariness for three straight sessions, and continues to price in, albeit cautiously, that an U.S. debt default and a resultant economic turmoil might be in the cards. Technology and Communication Services stocks became the biggest losers on the day, with treasury yields rising. Mega-cap growth stocks usually feel the heat when people rush to the safety of the bond market.
Consequently, shares of NVIDIA Corporation (NVDA - Free Report) and Microsoft Corporation (MSFT - Free Report) slid 1.6% and 1.8%, respectively. Both carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Economic Data
The U.S. Census Bureau and the U.S. Department of Housing and Urban Development jointly reported that New Home Sales for April had increased to 683,000, against a consensus of 658,000. For the prior period, March, the number was revised down to 656,000 from the previously reported 683,000.