4:15pm: Market holding it together despite debt ceiling jitters, says Allianz chief economic advisor
The Dow closed Tuesday down 231 points, 0.6%, to 33,056, the Nasdaq Composite fell 161 points, 1.3%, to 12,560 and the S&P 500 shed 47 points, 1.1%, to 4,146. The small-cap Russell 2000 index declined 4 points, 0.2%, to 1,792.
Investors are increasingly antsy over a lack of concrete updates regarding the debt ceiling talks between President Biden and House Speaker Kevin McCarthy. This afternoon, McCarthy described the day's talks as “productive” and “professional" but the issue remains unresolved.
“We are sending a very negative signal about our ability to run our economy, let alone be an anchor for the rest of the world,” Allianz chief economic advisor Mohamed El-Erian told CNBC’s “Squawk Box” on Tuesday. “And the market so far has actually dealt with it very well.”
Meanwhile, Apple shares declined 1.5% after the company announced a multibillion-dollar partnership with Broadcom to develop 5G radio frequency components in the US.
12.05pm: Stocks struggle as debt ceiling deadline worries mount
US stocks were mixed in noon trading after a debt ceiling meeting between President Biden and House Speaker McCarthy failed to produce a deal.
At midday, the Dow gained 11 points to 33,298, while the S&P 500 eased 9 points at 4,183 and the tech-heavy Nasdaq slipped 17 points to 12,704.
“We are sending a very negative signal about our ability to run our economy, let alone be an anchor for the rest of the world,” Mohamed El-Erian said.
Notable movers included shares of Yelp Inc, which jumped 10% after activist investor TCS Capital Management took an ownership stake in the community-driven platform that connects people with local businesses, while saying the company should explore strategic alternatives, including a sale.
9:40am: Uncertainty sees stocks move lower
US stocks moved lower at the open on Tuesday as investors remained on edge ahead of the country’s debt ceiling deadline.
Just after the opening bell, the Nasdaq had shed 63 points or 0.5% at 12,839 points, S&P 500 was down 17 points or 0.4% at 4,188 points, and the Dow Jones had shed 120 points or 0.4% at 33,240 points.
FOREX.com market analyst Fiona Cincotta said, given the long bank holiday weekend at the end of the week, the clock was definitely ticking on the debt ceiling negotiations.
“The closer to the X-date, the more we can expect the default risk to show in the market,” she said.
Meanwhile, earnings season continues with Lowe’s adding 1.8% at US$206.80 at the open after reporting a dip in its first quarter sales and slashing its full-year forecast, while Zoom plunged 6.8% to US$66.54 despite posting a quarterly earnings beat.
7:50am: No deal on debt ceiling
US stocks look set for a weaker start on Tuesday after a key meeting between President Joe Biden and House Speaker Kevin McCarthy still failed to strike a deal on the looming US debt ceiling breach.
In pre-market trading, futures for the Dow Jones Industrial Average (DJIA) were 0.2% lower, while those for the S&P 500 index were down 0.1%, and contracts for the Nasdaq-100 futures also lost 0.1%.
Wall Street put in a mixed session on Monday, with the DJIA losing 0.4%, while the S&P 500 finished little changed, up 0.02%. But the tech-laden Nasdaq Composite added 0.5% and even touched its highest intraday level and highest close since August.
McCarthy and Biden met at the White House on Monday evening, in a discussion that the House speaker described as “productive” and “professional.” Investors have been closely eyeing the debt-limit negotiations in Washington, hoping for more certainty as the so-called X-date of June 1 draws closer.
TickMill Group’s market analyst Patrick Munnelly commented: "While the meeting between US President Biden and House Speaker McCarthy was described as productive, there were no significant breakthroughs."
Investors have a batch of corporate quarterly earnings as a distraction on Tuesday, including numbers from retail stocks Lowe’s, BJ’s Wholesale and Dick’s Sporting Goods.
Meanwhile, on the economic front, data for the manufacturing and services sectors will be eyed, as well as new home sales.
TickMill's Munnelly noted: "Stateside, the Richmond Fed release will provide insights into regional economic activity. Additionally, market participants will closely watch the New Home Sales data for April, following a significant increase of over 9% in March. The consensus anticipates a slight decline, and attention will also be given to the months' supply figure, which decreased from 8.4 to 7.6 months' worth previously. These data points are expected to shed light on the state of the housing market and provide further indications of economic trends."
He added: "Federal Reserve member Logan, who is a voter in 2023, is scheduled to deliver remarks today. Last week, her hawkish commentary caused a market reaction. However, after Chair Powell's comments on Friday, the market's threshold to anticipate additional hawkishness is higher. Powell's remarks have been interpreted as signalling a likelihood of a pause at the June FOMC meeting. The market will closely monitor Logan's remarks for any potential insights into the future direction of monetary policy."