Stocks slide amid strong jobs data, looming debt ceiling vote: Stock market news today May 31, 2023
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US stocks traded lower Wednesday as investors kept a watchful eye on the prospects for the debt-limit deal in an expected House floor vote later. Meanwhile, strong US jobs data and China’s economic woes pressured global markets.
The S&P 500 (^GSPC) fell 0.81%, erasing its monthly gain on the last day of the trading session in May. The Dow Jones Industrial Average (^DJI) dipped 0.80% or more than 260 points. The technology-heavy Nasdaq Composite (^IXIC) slipped 0.80% at 12:20 pm ET.
US bond yields weakened as investors fretted over the potential impact of the debt-limit deal and braced for the release of fresh jobs data. The yield on the benchmark 10-year Treasury dropped to 3.66%. The two-year note yield slipped to 4.4%, while that on the 30-year bond dropped to 3.8%.
Equities lost steam as the Labor Department reported the number of job openings rose to over 10.1 million, up from economists’ expectations of 9.4 million openings.
The figures underscores “the tightness in the labor market is unlikely to fall off a cliff but rather continue downward on a bumpy path,” Oxford Economics wrote in a note on Wednesday. “While there are some concerns over the veracity of the JOLTS survey due to historically low response rates, the upshot remains that labor market strength remains robust.”
In light of recent economic data, markets are pricing in an increase of 25 basis points in interest rates from the Fed at policymakers’ meeting on June 13-14. On the commodities side, the dollar index rose, while crude oil slid below $70 a barrel.
Still, investors are still very keen on the latest developments in Washington. The debt ceiling agreement negotiated by President Joe Biden and House Speaker Kevin McCarthy passed its first key test on Tuesday when it gained approval from the Republican-led House Rules Committee despite opposition from hard-liners. That cleared the way for the deal to go before the House on Wednesday.
The clock is ticking down, 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 will run out of money to pay its bills, Treasury Secretary Janet Yellen has warned.
Hawkish comments from Federal Reserve officials posed a headwind for Wall Street. Federal Reserve Bank of Richmond President Thomas Barkin said Tuesday he’s looking for signs that demand is cooling to be convinced that inflation will ease, speaking at a National Association for Business Economics event.
Meanwhile, Federal Reserve Bank of Cleveland President Loretta Mester, president of the Federal Reserve Bank of Cleveland, said she sees no “compelling reason” to pause interest-rate increases amid the debt-limit deal, speaking in a Financial Times interview published Wednesday.
Fed officials Patrick Harker, Susan Collins, and Michelle Bowman are expected to speak publicly later Wednesday.
Elsewhere, China’s factory activity slumped to its weakest level for a second straight month, another sign its post-pandemic economic recovery is losing steam. Asian markets tumbled after the release of the data.
On the housing front, mortgage demand dropped to its lowest level since March, while refinancing activity also dampened to another low, the MBA data showed Wednesday.
Meanwhile, in corporate news, Hewlett Packard Enterprise Company (HPE) sank more than 6% after the company posted a revenue miss in its second quarter earnings and slashed its full-year sales guidance.
Still, the run-up in stocks linked to AI was losing momentum, after the buzz around the technology helped boosted the Nasdaq 100 Index (^NDX) on Tuesday. Shares of ChargePoint Holdings, Inc. (CHPT) slipped more than 1%, while C3.ai, Inc. (AI) dipped more than 10% Wednesday.
In single-stock moves, SoFi Technologies, Inc. (SOFI) shares rallied more than 11% in the wake of the debt ceiling deal. The bill would reinstate government student loan repayments, benefiting the online personal finance company.
Shares of HP Inc. (HPQ) sank more than 4% after the computing giant posted better-than-expected quarterly earnings on Tuesday, but reported sales that fell more than analysts estimated.
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