by U.S. stocks closed lower on Wednesday as investors closely scrutinize the prospects for the debt containment deal in an expected house floor vote. Meanwhile, strong US job 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 technology-heavy Nasdaq Composite (^IXIC) fell 0.63%.
US bond yields fell as investors worried about the potential impact of the debt curtailment deal and scrutinized the release of new jobs data. The yield on the 10-year Treasury benchmark fell to 3.62%. The yield on two-year bonds, which is more price sensitive, fell to 4.3%, while that on the 30-year bond fell to 3.84%.
Stocks lost momentum as the Labor Department reported job openings rose to more than 10.1 million, while economists had expected 9.4 million vacancies.
The figures underline that “the tight labor market is unlikely to fall off a cliff, but will continue down a bumpy path,” Oxford Economics wrote in a note on Wednesday. “While there are some concerns about the veracity of the JOLTS survey due to historically low response rates, the result is that labor market strength remains robust.”
In light of recent economic data, markets are pricing in a 25 basis point hike in Fed interest rates at the policymakers’ meeting on June 13-14. On the commodity side, the dollar index rose, while crude oil fell below $70 a barrel.
Yet investors are still very excited about the latest developments in Washington. The debt ceiling agreement negotiated by President Joe Biden and House Speaker Kevin McCarthy passed its first major test on Tuesday when it was approved by the Republican-led House Rules Committee despite opposition from hardliners. That cleared the way for the deal to be presented to the House on Wednesday.
The clock is ticking as Congress must race to pass the deal to avoid a catastrophic default by June 5. That so-called X-Date is when the US runs out of money to pay its bills, Treasury Secretary Janet Yellen has warned.
Meanwhile, both Federal Reserve Governor Philip Jefferson and Philadelphia Federal Reserve President Patrick Harker indicated on Wednesday that the central bank could pause rate hikes at its next policy meeting. Separately, the economy showed signs of cooling as hiring and inflation slowed, the Federal Reserve said in its Beige Book survey of regional business contacts.
Elsewhere, Chinese manufacturing activity fell to its weakest level for the second consecutive month, another sign that the post-pandemic economic recovery is losing momentum. Asian markets tumbled after the data was released.
On the housing front, demand for mortgages fell to its lowest level since March, while refinancing activity also fell to another low, MBA data showed on Wednesday.
Meanwhile, in company news, Hewlett Packard Enterprise Company (HPE) fell more than 7% after the company posted a revenue miss in its second-quarter earnings and lowered its full-year sales expectations.
Still, the run in AI-linked stocks lost momentum after buzz around the technology boosted the Nasdaq 100 Index (^NDX) on Tuesday. The shares of ChargePoint Holdings, Inc. (CHPT) were flat, while C3.ai, Inc. (AI) fell more than 8% on Wednesday.
Moving individual stocks, shares of SoFi Technologies, Inc. rose. (SOFI) by more than 15% in the wake of the debt ceiling deal. The bill would reinstate student loan repayments from the government, which would benefit the online personal finance company.
The shares of HP Inc. (HPQ) fell more than 5% after the computing giant posted better-than-expected quarterly results on Tuesday, but reported revenue that fell more than analysts had estimated.
Shares of Intel Corporation (INTC) rose more than 4% after the chipmaker said current quarter revenue is on track to be on the high side of its guidance.
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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv
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