U.S. stocks were lower on Wednesday morning as investors kept a close eye on prospects for the debt-limiting deal in an expected House vote later. Meanwhile, China’s economic woes have put pressure on global markets.
The S&P 500 (^GSPC) fell 0.52% while the Dow Jones Industrial Average (^DJI) fell 0.69% or more than 200 points. The tech-heavy Nasdaq Composite (^IXIC) slipped 0.13% at 10:06 a.m. ET.
US bond yields weakened as investors worried about the potential impact of the debt-limiting agreement and braced for the release of new jobs data. The yield on the benchmark 10-year Treasury fell to 3.68%. The yield on two-year bonds slipped to 4.4%, while that on 30-year bonds fell to 3.9%.
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.
Warmongering comments from Federal Reserve officials posed a headwind on Wall Street. Richmond Federal Reserve Chairman Thomas Barkin said on Tuesday he was looking for signs of slowing demand to be confident inflation would come down, at a National Association for Business Economics event.
Meanwhile, Federal Reserve Bank of Cleveland President Loretta Mester, chairwoman of the Federal Reserve Bank of Cleveland, said she sees no “compelling reason” to suspend interest rate hikes as part of of the debt limitation agreement, speaking in an interview with the Financial Times published on Wednesday.
Fed officials Patrick Harker, Susan Collins and Michelle Bowman are expected to speak publicly later on Wednesday.
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.
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.
Wednesday’s economic diary brought the latest information on the number of job vacancies. Data from the US Bureau of Labor Statistics indicated that the number of open jobs in the United States rose slightly to 10.1 million. Economists polled by Bloomberg were counting on 9.4 million openings.
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.
In US equities, 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) fell, while C3.ai, Inc. (AI) fell more than 6% on Wednesday.
In single stock moves, shares of SoFi Technologies, Inc. (SOFI) rose more than 4% 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 .
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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