sunny.png
Saturday June 3rd, 2023 9:53AM

Stock market today: Wall Street slides as debt worries worsen

By The Associated Press

NEW YORK (AP) — Stocks slid Tuesday as the U.S. government crept closer to the edge of a potentially disastrous default on its debt.

The S&P 500 fell 1.1% after House Speaker Kevin McCarthy said, “We’re not there yet” on a deal to prevent the U.S. government from running out of cash. That followed a meeting late Monday that he and President Joe Biden called productive but ultimately ended with no agreement.

The Dow Jones Industrial Average dropped 231 points, or 0.7%, while the Nasdaq composite lost 1.3%.

Until now, the stock market has remained largely resilient even as Washington approached a June 1 deadline. That's when the U.S. government may no longer be able to pay its bills, unless Congress allows it to borrow more. Economists and investors widely believe a default would send shockwaves through the global economy and financial markets.

The assumption on Wall Street has been for Congress to reach a deal at the 11th hour, as it's already done several times before, because the alternative simply seems too dire for anyone to allow.

But a worry on Wall Street is that Washington may not feel urgency to act until financial markets shake hard enough to light a fire under politicians in both parties.

“There's a theory that neither one looks like a hero until there is that scare of cascading prices,” said Keith Buchanan, senior portfolio manager at Globalt Investments. “One party or both can seem like white knights.”

Portions of Wall Street have shown more concern, particularly in the bond market where some Treasury bills are supposed to get repaid around the date of a possible default. Prices for those bonds have fallen, in part because of the debt-ceiling worries, which in turn has pushed up their yields.

But the stock market hasn't shown as much concern. Buchanan said that may be because it's difficult to know how prices across different markets would react to something that's never happened before and was once unthinkable.

He said he hasn't made any moves to investments he oversees because of fears of a default, at least not yet.

“I think everyone’s taking it moment by moment,” he said. “Every minute that goes by raises the urgency.”

The worries about the debt ceiling are coming on top of concerns that the slowing economy could be heading for a recession, even without a default. A preliminary report released Tuesday morning suggested the economy remains split, with growth for travel and other service businesses strengthening while manufacturing remains under pressure.

“The US economic expansion gathered further momentum in May, but an increasing dichotomy is evident," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

On Wall Street, AutoZone dropped 6% after reporting weaker growth in revenue for the latest quarter than analysts expected. It pointed to a slower-than-expected March.

Electric vehicle maker Lordstown Motors fell 5.3% to 28 cents after it announced a reverse stock split in order to boost its share price. Investors will get one new share for every 15 they currently hold. Its stock has remained below $1 since mid-March.

On the winning side of Wall Street was Lowe’s, which rose 1.7% after reporting stronger profit and revenue for the latest quarter than analysts expected. But it also cut its financial forecasts for the year partly because of lower-than-expected sales to do-it-yourself customers.

Retailers are among the last companies to report their results for the first three months of the year, and most companies have been beating expectations. Retailers in particular have gotten lots of attention because resilient spending by U.S. households has been one of the main positives keeping the economy out of a recession.

Manufacturing and other areas of the economy are struggling under the weight of much higher interest rates meant to get inflation under control.

High interest rates have also meant stress for the U.S. banking system. Three high-profile bank failures since March have rattled the system, and Wall Street has been on the hunt for the next bank that could suffer a debilitating drop in confidence by its customers.

Some of the heaviest scrutiny has been on PacWest Bancorp, but it rallied for a second day after announcing the sale of a $2.6 billion portfolio of real-estate construction loans. It rose another 7.9% after jumping 19.5% Monday.

Other banks also strengthened, including a 4.6% jump for Zions Bancorp.

All told, the S&P 500 lost 47.05 points to 4,145.58. The Dow dropped 231.07 to 33,055.51, and the Nasdaq lost 160.53 to 12,560.25.

In the bond market, the 10-year Treasury yield ticked down to 3.70% from 3.72% late Monday. It helps set rates for mortgages and other important loans.

The two-year yield, which moves more on expectations for the Fed, inched up to 4.34% from 4.32%.

Most stock markets abroad fell, including a 1.3% drop for Paris and a 1.5% slide for Shanghai.

——

AP Business Writers Matt Ott and Joe McDonald contributed.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Financial Services
© Copyright 2023 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
4-year-old child is 'OK' after being dropped from high border wall in San Diego
The U.S. Border Patrol chief says a 4-year-old child is “remarkably" OK after being dropped into the United States from a high border wall from Tijuana, Mexico
3:59PM ( 4 minutes ago )
Jimmy Carter, 3 months into hospice, is aware of tributes, enjoying ice cream
Jimmy Carter's grandson says the former president remains in good spirits three months after entering end-of-life care at home
3:25PM ( 38 minutes ago )
Energy Dept. cancels $200M grant to battery maker after GOP criticism over alleged ties to China
The Biden administration has canceled plans to award a $200 million grant to a U.S. battery manufacturer amid criticism from Republican lawmakers over the company’s alleged ties to China
3:20PM ( 43 minutes ago )
Associated Press (AP)
White House unveils new efforts to guide federal research of AI
The White House has announced new efforts to guide federally backed research on artificial intelligence
2:30PM ( 1 hour ago )
Netflix to charge an additional $8 month for viewers living outside US subscribers' households
Netflix has outlined how it intends to crack down on the rampant sharing of account passwords in the U.S. It's an attempt to reel in more subscribers to its video streaming service amid a slowdown in growth
2:15PM ( 1 hour ago )
Walter Royal, North Carolina chef who won on 'Iron Chef America' cooking with ostrich, dies at 67
The chef of a North Carolina steakhouse who triumphed with ostrich meat as a challenger on “Iron Chef America” has died
2:12PM ( 1 hour ago )
AP Business
UK economy to avoid recession but inflation still a worry, IMF says
The International Monetary Fund says the British economy will avoid falling into recession this year
8:02AM ( 8 hours ago )
Stock market today: Wall Street slips as debt worries hang
Wall Street is slipping as the U.S. government creeps closer to the edge of a potentially disastrous default on its debt
3:34AM ( 12 hours ago )
Stock market today: Wall Street edges lower as debt worries hang
Wall Street is edging lower as the U.S. government creeps closer to the edge of a potentially disastrous default on its debt
3:34AM ( 12 hours ago )
AP Business - Economy
Asian stocks fall after more US debt talks fail to break impasse
Asian stock markets are lower after more negotiations in Washington on government debt failed to yield a deal to avoid a potentially jarring default
3:34AM ( 12 hours ago )
Global stocks, Wall St futures fall after more US debt talks fail to break impasse
Global stock markets and Wall Street futures are lower after more negotiations in Washington on government debt failed to yield a deal to avoid a potentially jarring default
3:34AM ( 12 hours ago )
Stock market today: Wall Street futures tick down after US debt talks fail to break impasse
Wall Street dipped modestly in premarket trading after more talks in Washington on government debt ended with no deal to avoid a potentially jarring default
3:34AM ( 12 hours ago )
AP Business - Financial Markets
China's Sinopec signs agreement to enter retail fuel market in crisis-hit Sri Lanka
Chinese petroleum giant Sinopec has signed an agreement with Sri Lanka to enter its retail fuel market
12:53PM ( 1 day ago )
Federal Reserve Chair Powell hints at a pause in rate hikes when central bank meets next month
Chair Jerome Powell indicated that the Federal Reserve will likely forgo an increase in its benchmark interest rate when it meets in June for the first time since it began raising its key rate 14 months ago to fight high inflation
12:39PM ( 4 days ago )
The average long-term US mortgage rate rose to 6.39% this week, Freddie Mac says
The average long-term U.S. mortgage rate edged higher this week after a two-week drop, a modest move in line with a mostly moderate shift in home loan rates in recent weeks
12:17PM ( 5 days ago )
AP Business - Industries
Wells Fargo agrees to pay $1 billion to settle shareholders' class-action lawsuit
Wells Fargo has agreed to a pay $1 billion to settle a lawsuit filed by its shareholders
4:32PM ( 6 days ago )
CEO pay again in focus as the heads of failed banks appear before Senate panel
The recent failures of a trio of midsize banks has once again raised questions on whether executive compensation is tilted toward short-term gains rather than companies' long-term health
9:09PM ( 1 week ago )
Executives from failed banks questioned on CEO pay, risk management at Senate hearing
Executives from two of three banks that recently failed are appearing in front of the Senate Banking Committee on Tuesday to respond to questions about why their banks went under and what regulators could have done to avoid the calamities
9:09PM ( 1 week ago )
AP Business - Financial Services
4-year-old child is 'OK' after being dropped from high border wall in San Diego
The U.S. Border Patrol chief says a 4-year-old child is “remarkably" OK after being dropped into the United States from a high border wall from Tijuana, Mexico
3:59PM ( 4 minutes ago )
Jimmy Carter, 3 months into hospice, is aware of tributes, enjoying ice cream
Jimmy Carter's grandson says the former president remains in good spirits three months after entering end-of-life care at home
3:25PM ( 38 minutes ago )
Energy Dept. cancels $200M grant to battery maker after GOP criticism over alleged ties to China
The Biden administration has canceled plans to award a $200 million grant to a U.S. battery manufacturer amid criticism from Republican lawmakers over the company’s alleged ties to China
3:20PM ( 43 minutes ago )
Largest US gay rights group issues Florida travel advisory
The largest LGBTQ+ rights organization in the U.S. has joined other civil rights organizations in issuing a travel advisory for Florida
3:06PM ( 57 minutes ago )
Largest US gay rights group issues Florida travel advisory for what it says are anti-LGBTQ+ laws
The largest LGBTQ+ rights organization in the U.S. has joined other civil rights organizations in issuing a travel advisory for Florida
3:06PM ( 57 minutes ago )