FILE - A pedestrian walks past the New York Stock Exchange in New York City, Thursday, Oct. 27, 2022. (AP Photo/J. David Ake, File)
NEW YORK (AP) – Stocks are slipping on Wall Street as the U.S. government creeps closer to the edge of a potentially disastrous default on its debt. The S&P 500 was 0.4% lower early Tuesday, in the first trading after President Joe Biden and House Speaker Kevin McCarthy closed a meeting late Monday that they called productive but ended with no deal. Washington is facing a deadline as early as June 1. The stock market has remained resilient, but a worry on Wall Street is that Washington may not feel enough urgency to act until markets shake enough to show the stakes.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
Wall Street dipped modestly early Tuesday after talks in Washington on government debt ended with no deal to avoid a default.
S&P 500 futures were off less than 0.2% before the bell, while the Dow Jones Industrial Average inched down about 0.1%.
“The resumption of debt ceiling negotiations spurred some hopes despite distinct risks of brinksmanship and blame-shifting,” Tan Boon Heng of Mizuho Bank said in a report.
Worries about a potential U.S. debt default have added to investor unease about the health of the global economy following interest rate hikes to cool inflation and high-profile bank failures in the United States and Switzerland.
The U.S. government is forecast to run out of money to pay its bills as soon as June 1 if Congress doesn’t increase the amount the Treasury is allowed to borrow. That would send shockwaves through global financial markets and could weigh on an already weakening global economy.
President Joe Biden and House Speaker Kevin McCarthy said they had a productive discussion Monday at the White House but reached no agreement.
Republicans are determined to cut spending while Biden’s team offered to hold spending levels flat. Biden wants to increase some taxes on the wealthiest Americans and some big companies. McCarthy said early on that is out of the question.
Stocks rallied last week on hopes for a deal but fell back Friday when negotiations hit a roadblock.
Home improvement chain Lowe’s posted earnings early Tuesday, beating Wall Street estimates for both sales and profit. But the North Carolina company trimmed its forecast for the year, dragging its stock down 1.5% before the bell. Last week, Home Depot projected its first decline in annual revenue since 2009 in the aftermath of the housing market crash and financial crisis.
At midday in Europe, the FTSE 100 in London rose 0.3%, the CAC 40 in Paris fell 0.7% and Frankfurt’s DAX lost about 0.2%.
In Asia, the Shanghai Composite Index lost 1.5% to 3,246.23 and the Nikkei 225 in Tokyo shed 0.4% to 30,957.77. The Hang Seng in Hong Kong retreated 1.3% to 19,428.08.
The Kospi in Seoul advanced 0.4% to 2,567.55 and Sydney’s S&P-ASX 200 was less than 0.1% lower at 7×259.90.
India’s Sensex gained 0.3% to 62,153.31. New Zealand and Bangkok declined while Singapore and Jakarta advanced.
S&P 500 companies are in the midst of reporting a second straight quarter of profit drops from year-ago levels. The question is how much worse they will get because the economy is slowing under the weight of much higher interest rates meant to get inflation under control.
Investors hope the Federal Reserve will hold its key lending rate steady at its next meeting in June after a run of increases to cool business activity and inflation. That would be the first time for the Fed to meet without a rate hike in more than a year.
In the bond market, the 10-year Treasury yield rose to 3.75% 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, rose to 4.39% from 4.32%.
In energy markets, benchmark U.S. crude gained 50 cents to $72.49 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 44 cents on Monday to $71.99. Brent crude, the price basis for international oil trading, also climbed 50 cents to 76.49 per barrel in London. It added 41 cents the previous session to $75.99.
The dollar ticked down to 138.53 yen from Monday’s 138.56 yen. The euro retreated to $1.0782 from $1.0819.
Wall Street’s benchmark S&P 500 index edged up less than 0.1% on Monday, while the Dow fell 0.4% while the Nasdaq composite rose 0.5%.
– –
McDonald reported from Beijing, Ott reported from Silver Spring, Md.
