Wall Street falls as debt ceiling talks continue

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New Round of Debt Ceiling Negotiations Kicks Off Fed Minutes: Officials Agreed More Rise Needed “Less Certain” Indices Fall: Dow 0.68%, S&P 0.74%, Nasdaq 0.75%

(Reuters) – Wall Street’s main indexes fell on Wednesday as talks continued between the White House and Republican representatives about raising the debt ceiling without an agreement.

Stocks held lower after the release of the May 2-3 Federal Reserve meeting minutes, showing that Fed officials “generally agreed” last month that the need to raise interest rates “became less certain.”

The lack of progress on raising the US government’s $31.4 trillion debt limit before the June 1 deadline, with several rounds of inconclusive talks, has left investors more cautious as risks of a catastrophic default loom.

Negotiators for Democratic President Joe Biden and Republican Representative Kevin McCarthy resumed another round of discussions on Wednesday.

“Until yesterday, investors were very bullish on the US debt ceiling decision,” said Angelo Korkavas, chief investment strategist at Edward Jones. “But now as we get closer to … the June 1st date, we’re seeing some caution again.”

The Dow Jones Industrial Average fell 224.1 points, or 0.68%, to 32,831.41, the Standard & Poor’s 500 lost 30.49 points, or 0.74%, to 4,115.09, and the Nasdaq Composite fell 94.75 points, or 0.75%, to 12,465.50.

Ten of the 11 sectors of the S&P 500 were in negative territory, with the real estate sector declining (.SPLRCR). Energy (.SPNY) was the only gainer in the sector.

The CBOE Volatility Index (.VIX), known as a measure of fear on Wall Street, is hovering around three-week highs.

Fed policy has also been in focus, as investors expect the central bank to halt its aggressive rate hike campaign at its scheduled June 13-14 meeting.

Fed Governor Christopher Waller said he is concerned about the lack of progress on inflation, and while it may be possible to skip a rate hike at next month’s US central bank meeting, an end to the hike is not likely.

(Reporting by Shriyashi Sanyal in Bengaluru; Editing by Vinay Dwivedi

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Shrishi Sanyal

Thomson Reuters

Reports on global financial markets of great interest, covering a range of asset classes. In the game for more than 5 years. You can reach her at – +917483273460

Shristi Ashar A

Thomson Reuters

Shristi is a reporter, part of the markets team reporting on equity markets across the US, UK, Canada, Europe and emerging markets.

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