Sat, 23 Sep 2023

U.S. stocks close lower as debt ceiling vote looms

01 Jun 2023, 09:18 GMT+10

NEW YORK, May 31 (Xinhua) -- U.S. stocks ended lower Wednesday as investors waited for a House vote on the debt ceiling deal to avert a potential default.

The Dow Jones Industrial Average fell 134.51 points, or 0.41 percent, to 32,908.27. The S&P 500 decreased 25.69 points, or 0.61 percent, to 4,179.83. The Nasdaq Composite Index shed 82.14 points, or 0.63 percent, to 12,935.28.

Seven of the 11 primary S&P 500 sectors ended in red, with energy and industrials leading the laggards by losing 1.88 percent and 1.4 percent, respectively. Meanwhile, utilities and health led the gainers by rising 0.96 percent and 0.85 percent, respectively.

U.S. stocks fell Wednesday as investors watched closely on the federal debt ceiling debate. The U.S. House of Representatives on Wednesday voted 241-187 to take a procedural step needed to consider the measure, clearing its path to a final vote on the floor.

A House vote on the compromise deal, which was reached over the weekend by President Joe Biden and House Speaker Kevin McCarthy, is expected to take place later Wednesday, although the compromise draws opposition from lawmakers of both parties.

"I think we have the votes to pass this today," said Patrick McHenry, a Republican negotiator on the debt ceiling deal, according to CNBC.

That vote is expected to succeed, with the only question being by how big a majority. After that, the deal moves to the Senate, which will likely have to work the weekend to enact the legislation before the June 5 X-date, said Michael Zezas, global head of fixed income and thematic research with Morgan Stanley.

"So it seems then that we're closer to taking a key negative catalyst off the table for markets and the economy," said Zezas.

Stock indexes pared losses on Wednesday afternoon following some central bankers signaled that it might be appropriate to "skip" a rate hike at the Federal Reserve's upcoming monetary policy meeting in June.

"I am in the camp increasingly coming into this meeting thinking that we really should skip, not pause, but skip an increase," Philadelphia Federal Reserve President Patrick Harker said on Wednesday.

Federal Reserve Governor Philip Jefferson said Wednesday that even if the central bank opts to skip an increase in June, it would not necessarily mean the Fed is done hiking rates.

Meanwhile, Wednesday's Job Opening and Labor Turnover Survey, or JOLTS report, from the Labor Department revealed 10.1 million job openings on the last business day of April, an increase from an upward revision to 9.8 million in March, suggesting a tight labor market that could compel the Fed to raise rates again in June.

JOLTS data reminded Wall Street that the economy has a labor market that doesn't want to break, said Edward Moya, senior market analyst at OANDA, a supplier of online multi-asset trading services.

"Market calls that the Fed is done hiking won't be able to shake off this labor market strength if Friday's NFP (non-farm payrolls) report confirms this trend," said Moya.

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