Stocks Slide as Debt Worries Worsen

'Every minute that goes by raises the urgency'
By Newser Editors and Wire Services
Posted May 23, 2023 3:57 PM CDT
Stocks Slide as Debt Worries Worsen
House Speaker Kevin McCarthy speaks to reporters, Tuesday, May 23, 2023, as returns to his office from the House floor.   (AP Photo/Jacquelyn Martin)

Stocks slid on Wall Street Tuesday as the US government crept closer to the edge of a potentially disastrous default on its debt. The S&P 500 fell 47.05 points, or 1.1%, to 4,145.58 Tuesday as Democrats and Republicans still haven’t agreed on a deal to keep the US government from running out of cash. The Dow Jones Industrial Average fell 231.07 points, or 0.7%, to 33,055.51. The Nasdaq composite fell 160.53 points, or 1.3% to 12,560.25.

Until now, the stock market has remained largely resilient even as Washington approached a June 1 deadline. That's when the US government may no longer be able to pay its bills, unless Congress allows it to borrow more. Economists and investors widely believe a default would send shockwaves through the global economy and financial markets. The assumption on Wall Street was that Congress would reach a deal at the 11th hour, as it's already done several times before, because the alternative simply seems too dire for anyone to allow. But a worry on Wall Street is that Washington may not feel urgency to act until financial markets shake hard enough to show the stakes for politicians in both parties, the AP reports.

"There's a theory that neither one looks like a hero until there is that scare of cascading prices," says Keith Buchanan, senior portfolio manager at Globalt Investments. "One party or both can seem like white knights." He says he hasn't made any moves to investments because of fears of a default, at least not yet. "I think everyone’s taking it moment by moment," he says. "Every minute that goes by raises the urgency."

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On Wall Street, electric vehicle maker Lordstown Motors fell 5.3% to 28 cents after it announced a reverse stock split in order to boost its share price. Investors will get one new share for every 15 they currently hold. Its stock has remained below $1 since mid-March. On the winning side was Lowe’s, which rose 1.7% after reporting stronger profit and revenue for the latest quarter than analysts expected. But it also cut its financial forecasts for the year, partly because of lower-than-expected sales to do-it-yourself customers. (More stock market stories.)

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