U.S. stocks closed lower on Wednesday as investors closely watched the outlook for the debt-limiting deal in an expected House vote. Meanwhile, strong US employment data and China’s economic woes put pressure on global markets.
The S&P 500 (^GSPC) fell 0.60% while the Dow Jones Industrial Average (^DJI) fell 0.40% or more than 130 points. The tech-heavy Nasdaq Composite (^IXIC) fell 0.63%.
US bond yields weakened as investors worried about the potential impact of the debt-limiting agreement and scrutinized the release of new jobs data. The yield on the benchmark 10-year Treasury fell to 3.62%. Yields on two-year bonds, which are more rate sensitive, slipped to 4.3%, while those on 30-year bonds fell to 3.84%.
Shares lost steam as the Labor Department announced the number of job openings rose to more than 10.1 million, up from economists’ expectations of 9.4 million openings. .
The figures underscore “that the labor market tightening is unlikely to fall off a cliff, but rather continue to fall on a bumpy path,” Oxford Economics wrote in a note on Wednesday. “While there are concerns about the veracity of the JOLTS survey due to historically low response rates, the bottom line remains that labor market strength remains robust.”
In light of recent economic data, markets are pricing in a 25 basis point interest rate hike from the Fed at the June 13-14 policymakers’ meeting. On the commodities side, the dollar index rose, while crude oil slipped below $70 a barrel.
Still, investors are still very attentive to the latest developments in Washington. The debt ceiling deal brokered by President Joe Biden and House Speaker Kevin McCarthy passed its first key test on Tuesday when it won approval from the Republican-led House Rules Committee despite opposition from hardliners. That paved the way for the deal before the House on Wednesday.
Time is running out as Congress must race to pass the deal to avoid a catastrophic default by June 5. This so-called X-Date is when the United States will run out of money to pay its bills, Treasury Secretary Janet Yellen has warned. .
Meanwhile, Federal Reserve Governor Philip Jefferson and Federal Reserve of Philadelphia Chairman Patrick Harker signaled Wednesday that the central bank may pause rate hikes at its next policy meeting. Separately, the economy showed signs of slowing as hiring and inflation slowed, the Federal Reserve said in its Beige Book survey of regional business contacts.
Elsewhere, Chinese factory activity fell to its lowest level for a second consecutive month, another sign that its post-pandemic economic recovery is running out of steam. Asian markets fell after the data was released.
On the housing front, demand for mortgages fell to its lowest level since March, while refinancing activity also hit a new low, MBA data showed on Wednesday.
Meanwhile, in business news, Hewlett Packard Enterprise Company (HPE) fell more than 7% after the company posted a revenue loss in its second quarter results and cut its sales guidance for the full year.
Still, the surge in AI-related stocks was losing momentum, after buzz around the technology helped boost the Nasdaq 100 Index (^NDX) on Tuesday. Shares of ChargePoint Holdings, Inc. (CHPT) were flat, while C3.ai, Inc. (AI) fell more than 8% on Wednesday.
In individual stock moves, shares of SoFi Technologies, Inc. (SOFI) rose more than 15% following the debt ceiling agreement. The bill would restore government student loan repayments, benefiting the online personal finance company.
Shares of HP Inc. (HPQ) fell more than 5% after the IT giant posted better-than-expected quarterly results on Tuesday but reported sales that fell more than analysts expected .
Shares of Intel Corporation (INTC) rose more than 4% after the chipmaker said current-quarter revenue was on track to top its forecast.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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