Stocks slide with debt talks, Fed minutes in focus: Stock market news today
Here's what's moving markets on Wednesday, May 24, 2023.
US stocks ended the session lower Wednesday as investors fretted over a potential US debt default.
The S&P 500 (^GSPC) was down 0.73% at the close, while the Dow Jones Industrial Average (^DJI) fell 0.77%, or more than 200 points. The technology-heavy Nasdaq Composite (^IXIC) slipped 0.61%.
In Treasuries, the yield on the benchmark 10-year note was a touch higher at 3.74%, while two-year yields rose slightly to 4.36%. and those on the 30-year bond ticked lower to 3.98%.
The hangup in Washington's debt-ceiling negotiations is turning out to be longer than expected. Speaker Kevin McCarthy reportedly left Tuesday’s meeting saying to his Republican colleagues, "We are nowhere near a deal yet." Just hours earlier, he said in the Oval Office: "I think, at the end of the day, we can find common ground."
Meanwhile, a top McCarthy lieutenant said there are no more meetings planned, Bloomberg reported. The debt-limit standoff has stirred up some anxiety among investors, who have sought out haven assets.
Some believe the chance is that the House and Senate will end up voting on a deal next week, just hours before Treasury Secretary Janet Yellen's June 1 "X-date" deadline.
On Wednesday, Speaker McCarthy announced that talks would resume and said "I think we can make progress today" while also batting away suggestions that a deal is impossible at this point given the conservative Republican criticisms.
Investors are growing concerns that this debt standoff "could go right down to the wire," and are planning for the bumpy road ahead, Jim Reid and colleagues at Deutsche Bank wrote to clients.
“There’s also been talk about whether a short-term extension might now be needed to get this over the line, but for the time being, Speaker McCarthy has continued to downplay the prospect that will happen. So investors continue to wait nervously with no signs of a deal emerging just yet,” Reid added.
Separately, Federal Reserve officials generally agreed that it was less certain more interest rate increases were needed, but they were divided on the future. Some members were in favor for more increases while others expected a slowdown in growth to remove the need to tighten further, minutes released Wednesday showed.
"The minutes of the May meeting break no new ground, but we are slightly surprised that 'several' FOMC members thought further tightening might not be be necessary; we expected only 'a few," Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a note following the release.
The release of the Fed minutes comes after Federal Reserve Governor Christopher Waller said Thursday he doesn’t think the Fed should stop raising interest rates until there is clear evidence inflation is cooling.
Elsewhere, stocks are also facing pressure over China’s economic recovery, and escalating US-China chip tensions could signal more uncertainty ahead.
In single stock moves, shares of Palo Alto Networks, Inc. (PANW) advanced more than 7%, hitting a 52-week high on Wednesday after the company reported third-quarter adjusted earnings that came in above analysts' expectations. The cybersecurity company raised its guidance on profit and revenue for the year.
Toll Brothers, Inc. (TOL) shares gained after the homebuilder’s quarterly profit and revenue beat expectations as mortgage rates stabilized and improved buyer confidence boosted demand.
On the retail front, Kohl's Corporation (KSS) shares advanced after the retailer posted a surprise profit for the first quarter, helped by the department store chain's moves to cut inventory in the wake of weak sales.
PacWest Bancorp (PACW) shares sank more than 2% after the bank sold its real-estate lending arm. Meanwhile, Citi abandoned its plan to sell its small-business and middle-market banking operations in Mexico, by choosing instead to move forward an initial public offering, the bank announced on Wednesday.
Shares of XPeng (XPEV) sank more than 5% after the Chinese pure-play electric vehicle maker posted a steep drop in sales in their first quarter amid increased competition in the Chinese EV market, combined with an uneven recovery in China following its lifting of COVID-19 protocols.
On the earnings front, results from e.l.f. Beauty (ELF), Nvidia (NVDA), Snowflake (SNOW) are on deck Wednesday after the close.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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