- New round of negotiations on the debt ceiling begins
- Citigroup refrains from selling Mexico units
- Agilent falls on annual forecast cut
- Indices down: Dow 0.82%, S&P 0.89%, Nasdaq 0.94%
May 24 (Portal) – Major Wall Street indices fell on Wednesday as talks between the White House and Republicans dragged on raising the debt ceiling while investors awaited the minutes of the Federal Reserve’s latest meeting .
The lack of progress on raising the US government’s $31.4 trillion debt ceiling before the June 1 deadline, along with several fruitless rounds of negotiations, are keeping investors on edge amid the risk of an unprecedented default.
Negotiators for Democratic President Joe Biden and leading Republican Congressman Kevin McCarthy met for another round of discussions on Wednesday.
“These updates that you’re getting about talks moving forward or collapsing are just another source of volatility,” said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Company.
The CBOE Volatility Index (.VIX), known as Wall Street’s fear indicator, hovered near its three-week high.
Investors were also awaiting the minutes of the May 2-3 Fed meeting, scheduled at 14:00 ET (18:00 GMT), to assess the central bank’s rate path.
“We’re at this tipping point where there will be disagreement at the FOMC, and that should probably be reflected in the minutes,” said Jamie Cox, managing partner of Harris Financial Group
Cox added that policymakers may be torn between fighting inflation and its impact on the economy after the banking crisis.
Yields on shorter government bonds continued to rise, with the yield on the 1-month bond hitting another record high of 5.8920%.
Nvidia Corp (NVDA.O) fell 2.0% above its quarterly earnings after the market close. The chipmaker is the fifth most valuable public company and the top performer on the S&P 500 Index (.SPX), up 105% for the year.
Energy stocks were a bright spot, with the S&P 500 energy index (.SPNY) up 0.8% as oil prices rose about 2% after a fall in U.S. crude inventories.
At 12:16 p.m. ET, the Dow Jones Industrial Average (.DJI) was down 271.74 points, or 0.82%, to 32,783.77, the S&P 500 (.SPX) was down 36.78 points, or 0.89% 4,108.80 and the Nasdaq Composite (.IXIC) fell 117.55 points, or 0.94%, to 12,442.70.
Citigroup Inc (CN) fell 3.1% as the lender abandoned the sale of its Mexican retail unit Banamex, opting for a double listing instead.
Agilent Technologies Inc (AN) shares plunged 7.9% after the company lowered its full-year sales and earnings forecasts.
Mid-cap retailers rose on earnings, with Kohl’s Corp (KSS.N) up 5.1% as the department store chain posted surprise first-quarter earnings and reiterated its full-year sales guidance.
Urban Outfitters Inc (URBN.O) gained 16.2% as the clothing retailer reported positive quarterly results, while competitor Abercrombie & Fitch Co (ANF.N) rose 27.1% on raising its full-year sales forecast, with both up set a stable demand.
Declining issues outpaced the number of ascending issues on the NYSE by a 3.79 to 1 ratio and by a 2.76 to 1 ratio on the Nasdaq.
The S&P index posted no new 52-week high and 10 new lows, while the Nasdaq posted 21 new highs and 76 new lows.
Reporting by Shreyashi Sanyal in Bengaluru. Edited by Vinay Dwivedi
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