Wall Street Awaits Result of Debt Limit Talks

Meta was among the winners despite EU fine
By Newser Editors and Wire Services
Posted May 22, 2023 3:47 PM CDT
Stocks Drifts to Mixed Close Ahead of Debt Limit Talks
Speaker of the House Kevin McCarthy talks to reporters about the debt limit negotiations Monday, May 22, 2023.   (AP Photo/Mariam Zuhaib)

Stocks drifted to a mixed close as Wall Street waited to see whether a pivotal meeting later in the day would help the US government avoid a potentially disastrous default on its debt. The S&P 500 rose 0.65 points, or less than 0.1%, to 4,192.63. The Dow Jones Industrial Average fell 140.05 points, or 0.4%, to 33,286.58. The Nasdaq composite rose 62.88 points, or 0.5% to 12,720.78. Big Tech was continuing its strong run for the year so far, including Meta Platforms, which rose 1.1%. Even a record fine from the European Union couldn’t slow it. Micron Technology was on the losing end, down 2.9% after China accused its products of risking national security amid high tensions between Washington and Beijing.

The stock market is near its highest level since August, but it’s been mostly drifting within a tight range for weeks as several big worries weigh, the AP reports. The biggest near-term risk is the possibility of a US default, something that could occur as soon as June 1. That’s when Washington could run out of cash to pay its bills, unless Congress allows it to borrow more. Because Treasurys are seen as the safest investment on Earth, economists and investors say a default would likely trigger a recession for the economy and deep pain for financial markets. President Biden and House Speaker Kevin McCarthy are set to meet later in the day about raising the debt limit.

A nother worry that’s hung over the market is the strength of the US banking system, which has begun to crack under the weight of much higher interest rates. Much scrutiny has been on PacWest Bancorp, one of the smaller and mid-sized regional banks that Wall Street highlighted in its hunt for the next possible bank to suffer a drop in confidence . Its stock rose 19.%6 after it said it agreed to sell a portfolio of real-estate construction loans with about $2.6 billion in principal still outstanding to Kennedy Wilson. PacWest’s stock is still down 69.3% for the year so far. (More stock market stories.)

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