4:05pm: Growth worries intensify
While optimism about a debt deal had helped to lift sentiment on Wall Street in recent days, the pressure elsewhere has been increasing.
At 4pm, the Dow had lost 0.4% to close at 32,908; the S&P 500 finished 0.6% lower at 4,180 and the Nasdaq had also lost 0.6% to end the day at 12,935 points.
Investors showed concern on China, where economic activity is faltering.
"Overnight we had another poor showing from China where the manufacturing sector PMI weakened to 48.8, the lowest since December. From the US we have also had a very poor Chicago PMI, which missed expectations by a mile with a print of 40.4 vs. 47.1 eyed. This puts Thursday’s publication of the ISM manufacturing PMI into focus as concerns about global factory output continue to rise," Fawad Razaqzada| of StoneX wrote.
"With the markets struggling around the world, Wall Street, which has been relatively immune to China’s weakening story so far, is starting to show a few cracks underneath the surface. Friday’s big rally seems like a distant memory already."
12.05pm: Stocks struggle in last trading day of May
US stocks were lower in noon trading as investors nervously await a Congressional vote this evening on the recent debt ceiling deal.
At midday, the Dow lost 261 points to 32,782, while the S&P 500 eased 34 points at 4,171 and the tech-heavy Nasdaq slipped 92 points to 12,925.
“Some investors are worried that the high-decibel, dissenting fringes might end up causing this vote to fail and require some adjustments before it ends up passing,” CFRA Research chief investment strategist Sam Stovall said.
Notable movers included shares of Ambarella Inc, which sank 17% after the semiconductor maker’s 2Q guidance disappointed.
11:10am: VinFast revises IPO plans
Vietnamese electric automaker VinFast withdrew a December 2022 application to the SEC following its recent tie-up with Black Spade Acquisition Co (BSAQ), a bank check company. However, it said in a filing with the SEC dated May 30 that it intends to file a new registration statement on Form F-4 in connection with the proposed business combination.
Following the transaction with Black Spade, the company said it will have an enterprise value of approximately US$27 billion and an equity value of US$23 billion, not including cash from BSAQ's approximately US$169 million of cash in trust.
9:59: Nasdaq on pace to be May's best performing index
Shortly after the open, the Dow was down 209 points, 0.6%, to 32,834, the Nasdaq Composite slid 9 points to 13,008 and the S&P 500 declined 19 points, 0.5%, to 4,186.
Investors are awaiting a House vote to ratify an agreement reached over the weekend between President Joe Biden and House Speaker Kevin McCarthy to raise the country’s debt ceiling.
Despite the morning struggles, the Nasdaq is up more than 6% for the month of May thanks in large part to a surge in semiconductor and artificial intelligence stocks. The S&P 500, by comparison, is up just 0.4%, and the Dow is down 3.6%.
7:55am: Down to the House
Wall Street is likely to open lower as a weekend agreement between US President Joe Biden and House Speaker Kevin McCarthy to raise the country’s debt ceiling, now at $31 trillion, goes before the US House of Representatives for debate and an expected vote.
Futures for the Dow Jones Industrial Average fell 0.2% in Wednesday pre-market trading, while those for the broader S&P 500 index shed 0.3% and contracts for the Nasdaq-100 also declined 0.2%.
The main US indexes were mixed at the close on Tuesday, with inflation and interest rate concerns also weighing on the market ahead of non-farm payroll data on Friday. The DJIA lost 0.2% to finish at 33,043, the S&P 500 was flat at 4,206 and the Nasdaq finished 0.3% ahead at 13,017 points as a rally in NVIDIA’s shares buoyed other tech-sector stocks.
“With the White House and Republican leaders agreeing a deal on the debt ceiling at the weekend, markets are now obsessing about whether the deal will get the necessary votes to pass into law, as partisan interests line up to criticise the deal,” commented Michael Hewson, chief market analyst at CMC Markets.
“With the deadline for a deal now said to be next Monday, 5th June, a vote will need to go forward by the end of the week, with ratings agencies already sharpening their pencils on downgrades for the US credit rating.”
The US data docket for today is relatively light, with two notable releases, according to TickMill Group market analyst Patrick Munnelly.
"First, the JOLTs survey will offer detailed information on the employment market developments in April, providing valuable insights into job openings, hires, and separations," Munnelly said.
"Secondly, the Federal Reserve will release its Beige Book, which compiles anecdotal reports from various sectors of the economy. This report offers qualitative information on economic conditions across different regions of the United States. It provides further insight into the effectiveness of previous rate hikes and allows policymakers to gauge the overall state of the economy."
Contact the author at stephen.gunnion@proactiveinvestors.com