Dow slides 200 points as traders await House vote on debt ceiling: Live updates
On Wednesday, the stock market experienced a decline as investors closely followed the federal debt ceiling debate in Washington, which was the final trading day of May. The Dow Jones Industrial Average dropped by 274 points or 0.8%, while the S&P 500 dipped 0.9%, briefly pushing the index into negative territory for the month. The Nasdaq Composite also pulled back by 0.7%.
A deal on the debt ceiling, reached over the weekend by President Joe Biden and House Speaker Kevin McCarthy, cleared a significant hurdle on Tuesday night by advancing to the House floor after a 7-6 vote in the House Rules Committee. The floor vote was expected to take place around 8:30 p.m. ET on Wednesday.
Representative Patrick McHenry, a GOP negotiator on the debt deal, expressed confidence in passing the bill on CNBC’s “Squawk Box” on Wednesday morning, saying, “I think we have the votes to pass this today.”
Sam Stovall, chief investment strategist at CFRA Research, suggested that a debt ceiling deal would likely pass before the U.S. would face default. However, investors are concerned about the possibility of more changes and time being needed before an official agreement is reached. Stovall noted that once a bill is approved, market participants will shift their focus to the June Federal Reserve policy meeting.
Some investors are worried that strong dissenting opinions might cause the vote to fail, leading to the need for adjustments before it eventually passes. Consequently, people are taking profits ahead of the vote.
As for the performance of the major indices in May, the Nasdaq Composite was up 5.7%, while the S&P 500 was nearly flat for the month. The Dow fell approximately 3.9%.
The outperformance of the tech-heavy Nasdaq is largely attributed to excitement around artificial intelligence, which briefly drove Nvidia’s market cap above $1 trillion on Tuesday. However, some on Wall Street are concerned about the market’s narrow strength.
Regarding other market news, the Federal Deposit Insurance Commission (FDIC) released a report stating that U.S. bank deposits declined by $472.1 billion in the first quarter, marking the largest outflow since at least 1984. This was the fourth consecutive quarter of outflows, primarily driven by larger accounts. Uninsured deposits declined by 8.2%, while insured deposits actually rose by 2.5%.
On a positive note, Intel shares experienced a more than 4% increase after the company’s CFO, David Zinsner, made bullish comments at a conference. Zinsner mentioned that the company’s data center division is starting to turn around, and he expects China’s inventory situation to improve after the third quarter. He also stated that second-quarter revenue is expected to be at the high end of the company’s guidance. However, Intel has been perceived as losing out to Nvidia in the AI-driven boom, with Nvidia’s stock outperforming Intel’s this year. Year to date, Intel is up 17%, while Nvidia has more than doubled in value.
Bank stocks were falling on Wednesday, with the Financial Select Sector SPDR Fund (XLF) down 1.8%.
