NASDAQ 100, Dow Jones, S&P 500: Weaker Amid Debt Ceiling Vote, Labor Market Data

Highlights

• Stock indexes decline due to debt ceiling vote and strong labor market data.
• Nasdaq set for best May performance since 2020, S&P 500 relatively unchanged, Dow Jones declines.
• Debt ceiling vote creates uncertainty among investors and market participants.

Stocks Dip Amid Debt Vote

At the mid-session on Wednesday, the major U.S. stock indexes are lower. This downward movement can be attributed to the impending crucial vote by lawmakers on a deal to raise the nation’s debt ceiling. Investors are closely watching this development as it has the potential to impact the overall market sentiment. Furthermore, unexpectedly strong labor market data added to the market dynamics, reinforcing expectations of another interest rate hike by the Federal Reserve.

As of 16:02 GMT, the blue chip Dow Jones Industrial Average was trading at 32,884.97 points, reflecting a decline of 157.81 points or 0.48%. The benchmark S&P 500 Index stood at 4,183.64 points, down 21.88 points or 0.52%, while the tech-weighted Nasdaq Composite recorded a value of 12,963.81 points, indicating a decrease of 53.62 points or 0.41%.

Nasdaq Surges, Dow Declines

The Nasdaq index had a strong month in May. With a gain of 5.7%, the Nasdaq index is poised to achieve its best performance since 2020. On the other hand, the S&P 500 index is expected to end the month relatively unchanged, while the Dow Jones Industrial Average has experienced a decline of 3.8%. Specifically, the financial sector within the S&P 500, as represented by the S&P 500 financial sector index, dropped by 1.7%. Additionally, bank stocks witnessed a larger decline of 2.7%.

Debt Ceiling Bill Faces Debate

A bill to increase the U.S. debt ceiling, which currently stands at $31.4 trillion, and implement new federal spending cuts has reached the House of Representatives for discussion on Tuesday. Traders are expecting lawmakers to vote on its passage later in the evening.

If the bill passes in the House, it will then move to the Senate for further debate, which could potentially extend until the weekend, as there is a deadline of June 5 looming.

The deal may be approved, but some Congress members oppose it. As long as the deal remains pending, there might be a sense of nervousness among investors and market participants.

Surprising Job Openings Signal Strength

The latest Job Openings and Labor Turnover Survey (JOLTS) report from the Labor Department revealed an unexpected increase in job openings in the United States during April. This indicates that the labor market continues to display resilience and strength.

The JOLTS report came as a surprise to many investors. However, it also underscores the fact that we have not yet moved past the period of inflationary pressures. This suggests that the Federal Reserve is not finished with its monetary tightening actions.

Fed Expected to Hike Rates

It is highly likely that the Fed will raise interest rates in June and possibly again in the future. Traders are currently pricing in a nearly 70% probability of a 25-basis point increase at the Fed’s upcoming meeting on June 13-14. This represents an increase from the little over 60% chance observed previously. Investors are now eagerly anticipating the release of the Labor Department’s highly anticipated jobs report for May, scheduled for Friday.

Stocks Tumble on Earnings Disappointments

Several stocks are making notable moves at the mid-session. Advance Auto Parts Inc experienced a sharp decline of 33.9% after revising its forecasts. Other auto parts companies also saw decreases in their stock prices. Hewlett Packard Enterprise slid by 7.1% as it failed to meet revenue estimates. Additionally, Nvidia Corp fell by 3.6%, despite briefly surpassing a market value of $1 trillion.