US stocks ended the session lower on Tuesday as investors digested fresh economic data and monitored any updates over the debt-ceiling standoff.
It proved to be a lackluster session for the equity market, with the S&P 500 (^GSPC) dropping 0.64%, while the Dow Jones Industrial Average (^DJI) fell over 1%, declining by more than 300 points. The technology-heavy Nasdaq Composite (^IXIC) dipped 0.18% at the close.
Wall Street is watching for signs of movement in the debt-ceiling impasse, with a meeting underway between President Joe Biden and House Speaker Kevin McCarthy Tuesday afternoon in Washington.
Treasury Secretary Janet Yellen sounded the alarm Tuesday morning ahead of the meeting with congressional leaders that “time is running out” to avert an economic catastrophe from failing to raise the debt ceiling. She also wrote a letter to lawmakers that “it would cause severe hardship to American families”, with the US potentially defaulting as soon as June 1.
Tuesday’s meeting will include Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell and House Democratic Leader Hakeem Jeffries. It follows a White House meeting last week that failed to produce a breakthrough. Speaker Kevin McCarthy said Tuesday morning there had been “no progress” in talks overnight ahead of the afternoon gathering.
Meanwhile, investors turned their attention to economic data, which showed that retail sales rose 0.4% in April, representing only half of the growth that Wall Street had expected. Economists surveyed by Bloomberg called for a 0.8% rise over the prior month after a surprise drop in March.
Separately, on the housing front, confidence among US single-family homebuilders hit the highest level in 10 months, improving in May for the fifth consecutive month, as limited home stock helped to renew optimism for the sector.
Federal Reserve Bank of Cleveland President Loretta Mester said on Tuesday she doesn’t believe that the US central bank is at a point yet where it can hold interest rates steady for a period of time, given how stubborn inflation is.
Yields across the US curve gained, the yield on the US 10-year Treasury note rose to 3.53%, while the yield on the two-year note rose to 4.06%.
Also on Wall Street’s docket are earnings from retailers such as Walmart (WMT) and Target (TGT), along with China’s tech giants Alibaba (BABA) and Tencent (TCEHY).
Home Depot (HD) kicked off, posting first-quarter earnings that mostly missed estimates, while same-store sales came in well below forecasts. The home-improvement giant cut its guidance for fiscal full-year sales growth. Shares dropped more than 2% Tuesday.
Elsewhere, gold fell below $2,000 level. The precious metal has been drawing support as a safe haven as the potential builds for a US debt-ceiling crisis.
“Everyone is extremely confident that a default will not happen but the closer we get to the deadline, the more we’ll see those risks being priced into the market, which could support gold,” Craig Erlam, senior market analyst, wrote in a note to clients.
In Washington, former executives from Silicon Valley Bank and Signature Bank were tested before the Senate on Tuesday.
Former Silicon Valley Bank CEO Greg Becker told lawmakers Tuesday that he was justly compensated as “unprecedented events” caused the lender’s failure, pushing back against assertions that he enriched himself while ignoring risks.
Regional bank stocks were mixed Tuesday. PacWest Bancorp (PACW) shares dipped more than 14%, while Western Alliance Bancorporation (WAL) shares rose more than 2%.
In other single stock moves, Horizon Therapeutics (HZNP) shares a 14% sank amid reports the Federal Trade Commission is preparing to file a lawsuit as early as Tuesday to block Amgen’s (AMGN) $27.8 billion deal to buy the drugmaker.
Warren Buffett’s Berkshire Hathaway raised its commitment to Bank of America (BAC) and bought new stock in Capital One (COF), according to filings. COF is up more than 2% Tuesday.
Shares of Baidu, Inc. (BIDU) gained after the Chinese search-engine giant posted first-quarter earnings that beat analysts’ estimates as revenue rose 10%.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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