NEW YORK, May 24 — Wall Street stocks tumbled yesterday on increased fears over a potential US debt default after the latest round of negotiations failed to produce a breakthrough.
While the White House pointed to some progress in the latest round of talks with House Speaker Kevin McCarthy, markets are beginning to get more worried about the situation, analysts said.
Treasury Secretary Janet Yellen has said an agreement must be reached by June 1.
“I think the realisation hit people today, that for lack of a better word, it is getting close,” said Steve Sosnick of Interactive Brokers.
“This is the first time that I really think there’s been some real nervousness expressed about the debt situation,” Sosnick said.
Stocks were in the red most of the day, but moved lower in the afternoon, with the S&P 500 ending 1.1 per cent lower.
Earlier, European stock markets and major Asian indices also finished in the red.
Months of negotiations have failed to break the deadlock and lift the borrowing limit from the current US$31.8 trillion (RM144.6 trillion), though Biden and McCarthy ended their latest meeting on Monday on a positive note.
“Stock market participants are appearing fatigued by all the talk and the absence of the all-important action of raising the debt ceiling with June 1 lurking as a potential X-date when the US might not be able to pay all its bills,” said Briefing.com analyst Patrick O’Hare.
In Europe, eurozone stock markets dropped as data showed eurozone economic growth slowed in May. London’s FTSE 100 also fell even as the IMF upgraded its forecast for the UK economy, saying it no longer expects a recession this year.
Back in the United States, the Federal Reserve remains in focus ahead of next month’s policy meeting, as investors track whether it will lift interest rates again or leave them unchanged for the first time since starting its hiking campaign more than a year ago.
“The debt ceiling drama has been a permanent distraction of late, but other components in the fray include the spectre of the Fed continuing to raise rates, because inflation remains too high,” O’Hare said.
Key figures around 2030 GMT
New York - Dow: DOWN 0.7 per cent at 33,055.51 (close)
New York - S&P 500: DOWN 1.1 per cent at 4,145.58 (close)
New York - Nasdaq: DOWN 1.3 per cent at 12,560.25 (close)
London - FTSE 100: DOWN 0.1 per cent at 7,762.95 (close)
Frankfurt - DAX: DOWN 0.4 per cent at 16,152.86 (close)
Paris - CAC 40: DOWN 1.3 per cent at 7,378.71 (close)
EURO STOXX 50: DOWN 1.0 per cent at 4,342.38 (close)
Tokyo - Nikkei 225: DOWN 0.4 per cent at 30,957.77 (close)
Hong Kong - Hang Seng Index: DOWN 1.3 per cent at 19,431.25 (close)
Shanghai - Composite: DOWN 1.5 per cent at 3,246.24 (close)
Euro/dollar: DOWN at US$1.0774 from US$1.0813 on Monday
Pound/dollar: DOWN at US$1.2415 from US$1.2437
Dollar/yen: DOWN at ¥138.57 from ¥138.60
Euro/pound: DOWN at 86.74 pence from 86.94 pence
West Texas Intermediate: UP 1.2 per cent at US$72.91 per barrel
Brent North Sea crude: UP 1.1 per cent at US$76.84 per barrel
— AFP
