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HomeInvestmentWall St slips on debt ceiling uncertainty By Reuters

Wall St slips on debt ceiling uncertainty By Reuters


© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., April 14, 2023. REUTERS/Brendan McDermid

By Chuck Mikolajczak

NEW YORK (Reuters) – U.S. stocks closed out the trading week on a soft note on Friday as early gains dissipated after U.S. debt ceiling negotiations in Washington were paused, denting optimism a deal could be reached in coming days to dodge a default.

Stocks had rallied over the past two sessions on growing confidence a deal to raise the $31.4 trillion debt limit could be reached in coming days, with the benchmark climbing more than 2%. But an initial advance on Friday reversed on reports of the pause in talks while Federal Reserve Chair Jerome Powell spoke at a monetary policy panel.

“The market seemed to be going into this weekend thinking that the talks were going to move toward the framework for an agreement … but what you’re seeing now is the Republicans saying, no, this is not acceptable, and they just staged a walkout,” said Quincy Krosby, chief global strategist at LPL Financial (NASDAQ:) in Charlotte, North Carolina.

“It could be to put more pressure on the Democratic caucus and also take advantage of the fact that Biden is overseas. But this headline on a Friday afternoon is definitely not a positive.”

According to preliminary data, the S&P 500 lost 6.02 points, or 0.14%, to end at 4,192.03 points, while the Nasdaq Composite lost 30.46 points, or 0.24%, to 12,657.90. The Dow Jones Industrial Average fell 111.03 points, or 0.33%, to 33,424.88.

The S&P 500 and Nasdaq notched their biggest weekly percentage gains since the final week of March.

The interest rate outlook remained uncertain. Powell said it is still unclear if additional rate increases are needed as the central bank weighs the impact of past hikes as evidenced by the recent troubles in the banking sector.

Also dampening sentiment was a CNN report that U.S. Treasury Secretary Janet Yellen told bank CEOs on Thursday that more bank mergers may be necessary after a series of bank failures.

Shares of regional banks, which were the first in the industry to feel the impact of the Fed’s tightening policy, fell, with the KBW Regional Banking index down nearly 3% on the session. Still, the index was up nearly 6% on the week to snap a three-week streak of declines as investors viewed the troubles in the sector as largely contained for now.

Shares of Morgan Stanley (NYSE:) lost ground after CEO James Gorman announced he would step down from the role in the next 12 months.

Foot Locker (NYSE:) Inc plummeted and suffered its biggest daily percentage drop since Feb 25, 2022 after the footwear retailer cut its annual sales and profit forecasts.

The warning also weighed on Dow component Nike Inc (NYSE:), and Under Armour Inc (NYSE:).

Foot Locker’s update wraps up a week of caution from other retailers this week, including Target Corp (NYSE:), Home Depot Inc (NYSE:) and TJX Companies Inc (NYSE:), as consumers adjust to stubbornly high inflation and higher interest rates.



This story originally appeared on Investing

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