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Wall Street closes down as focus shifts to inflation data, debt talks

Published 05/09/2023, 05:43 AM
Updated 05/09/2023, 07:16 PM
© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 4, 2023. REUTERS/Brendan McDermid

By Carolina Mandl and Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stock indexes closed lower on Tuesday as investors grew more cautious ahead of a U.S. consumer price index report and a meeting between U.S. political leaders to discuss the debt ceiling.

Investors will look for clues on whether inflation is continuing to ease following the Labor Department's consumer price index (CPI) report on Wednesday.

Talks over the U.S. debt ceiling are adding to caution in the market as traders were also waiting for an update on plans for the debt ceiling from a meeting between U.S. President Joe Biden, Republican House Speaker Kevin McCarthy and other congressional leaders at the White House.

Worries of a potential government default loom over Washington as early as June 1, if Congress does not act to resolve the deadlock.

"Overall, it's a relatively mild day, but both the debt ceiling as well as the inflation are causing some anxiety," said Randy Frederick, managing director of trading and derivatives at the Schwab Center for Financial Research.

The Dow Jones Industrial Average fell 56.88 points, or 0.17%, to 33,561.81, the S&P 500 lost 18.95 points, or 0.46%, to 4,119.17 and the Nasdaq Composite dropped 77.36 points, or 0.63%, to 12,179.55.

Volume on U.S. exchanges was 9.35 billion shares, compared with the 10.68 billion average for the full session over the last 20 trading days.

Disappointing forecasts from companies such as PayPal (NASDAQ:PYPL) and Apple (NASDAQ:AAPL) supplier Skyworks also weighed on the mood. They were down 12.73% and 5.15%, respectively.

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Shares of PayPal Holdings dropped and pressured the benchmark S&P 500 after the company cut its margin forecast. The stock was also among the top drags on the Nasdaq.

Skyworks Solutions (NASDAQ:SWKS) Inc shares slid after the company forecast current-quarter revenue and earnings below estimates.

"Companies have generally been beating earnings expectations, but earnings season is always choppy, and today we have some weaker results. That's weighing a bit on the market," said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

Pacwest Bancorp (NASDAQ:PACW) had another volatile day, leading losses in regional banks earlier in the session before closing up 2.35%.

"Any relief that we get in terms of regional banking stress is good, but it's far too early to say that things are normalized just because a couple of very beaten down banks are having a good day," said Steve Sosnik, chief strategist at Interactive Brokers (NASDAQ:IBKR) said.

Shares of other Apple suppliers including Qualcomm (NASDAQ:QCOM), Broadcom (NASDAQ:AVGO), Qorvo (NASDAQ:QRVO) and Corning (NYSE:GLW) ended lower. The Philadelphia SE Semiconductor Index closed down 1.87%.

Boeing (NYSE:BA) Co rose 2.34% after budget carrier Ryanair Holdings (NASDAQ:RYAAY) Plc placed a multi-billion dollar order for Boeing jets.

Novavax (NASDAQ:NVAX) surged 27.79% as the drugmaker planned a 25% cut to its global workforce.

Under Armour Inc (NYSE:UAA) fell 5.66% as the sports apparel maker forecast its annual sales and profit below street expectations.

Dialysis services provider DaVita (NYSE:DVA) Inc jumped 12.90% on a rise in its annual profit forecast as demand for procedures pick up in the U.S.

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Declining issues outnumbered advancing ones on the NYSE by a 1.59-to-1 ratio; on Nasdaq, a 1.35-to-1 ratio favored decliners.

The S&P 500 posted 14 new 52-week highs and 14 new lows; the Nasdaq Composite recorded 77 new highs and 171 new lows.

(Graphic: LPL's Debt ceiling sell-off graphic: April-Oct 2011 - https://fingfx.thomsonreuters.com/gfx/mkt/mopakoykwpa/debtceilingreturnslpl.PNG)

Latest comments

The taxes much be higher on the richest the tax is nearly tha same as in 1960 it’s the richest tha much pay more in tax the big firms much pay more Biden is right about that the laborers suffer every time
US wealth disparity has increased a lot since 1960, too.
Markets will vault higher on debt ceiling talks despite the hyperinflation.
"Too Big to Fail" watch a movie someone is cheating on you
Congratulations to the UK 👑👑
The FED is mainly concerned about all those countries that hold $USD not the US economy or its people. If US interest rates drop say goodbye to the dollar. IMO Interest rates will be hiked again in June and this will require fudged job reports and goldilocks inflation numbers
us is playing druma on inflation.playing game with middle class and poor people.
Inflation is largely from Russian aggression, enabled partly by India purchasing Russian oil and arms.
In what world does that make any sense?
  In the real world outside your imaginary world.
Don't be shocked if the Trumplicans actually drive the bus into the ditch. My bet is that Biden directs Treasury to ignore the Debt Limit and forces the Rs to take him to court. Strap in. It's going to be a wild ride.
The trillion-dollar coin is a retrumplican idea.  Biden should use that; it'll be a hoot to see retrumplicans attack their own idea.
At least we can drive the bus not like the dribbling brandon sitting at the back eating ice cream and pooping.
  So retrumplcians can "at least" drive the bus into the ditch.   Yay!?
Bond yields rising today. Probably anticipating higher than expected inflation numbers.
The Debt ceiling drama will save the day for stocks. They purposefully cast doubt on whether the ceiling will be raised...then when it is, the euphoria sets in and stocks soar 1000 points. Same old nonsense!
great can't wait for the bull market to set off fireworks
I am all in waiting for the bull run
raising rates as - up and quick - with the vast amount of global debt wil of course createa  very large recession - and the first major signs of that are now coming through - the market should wake up to the reaility of the situation in the next few weeks - exports from  china and india and South Korea have dropped off a cliff - german manufacturing figures have just dropped off a cliff - dry baltic index dropped off a cliff - global trade is screeching to a halt - these are all good forward looking indicators used by professionals - not the rubbish the US gov or Chinese gov feeds us.
"Global Trade Data Shows Early Signs of ‘Reglobalization’" - "Despite talk of globalization’s demise, economic integration via cross-border commerce has shown remarkable resilience through war, famine and a pandemic. Over the past three years, world trade as a share of global production has softened a bit but remains largely in line with historical trends. In fact, there has been no meaningful shift in the trajectory toward greater trade openness since at least 2006, according to a recent ING Groep NV analysis."  --  www.ttnews.com/articles/global-trade-reglobalization
China Exports (YoY) (Apr) 8.5% vs. 8.0% expected.
people are not buying us companies product in India
So Americans should boycott India goods/services.
There's nothing left made in America. They off shored everything because it was cheap. Globalism.
  no.  The USA is the world's #2 manufacturer.
devil Biden have done this
business in world is in worst position.people will wear gold in this position.
Brookings Institute says US default will cost US $750 billion in increased future debt costs. Considering the multi-trillions of woke spending, could that cost be worth a fundamental directional change for future generations?
The better question is will that $750 billion cost buy "a fundamental directional change for future generations"?  And will the change, if there is a change, be for the better or worse?
gold ts consolidating around 2025 it is ready for next upside...
let's Immaging a default scenario, what move could brings you earnungs? SQQQ? or golden barrick stocks purchasing?Please share your opinion.
Gold and Bitcoin are rational options.
i'm shorting tqqq
apple, Amazon, walll mart going to perform worst. still banking crises not over in us. more rate hike and economy slow down coming. apart from it big is us govt default
I bet you other companies will perform worse.
How do you know the cpi is likely to climb .4%? If thats the estimate for m/m which is only one part of 4 readings since you clearly have an agenda just look at the track record of what is expected
higher oil prices for  March and April and higher input costs for manufacturers in past three months - all that comes through to the CPI with a lag of a month or two
After fed is done with the rate hike stuff. Then only the true picture will out regarding the health of all the major companies.
It could still be managed if the managers actually cared, but it's all about them and their unique skills in the trade. Where are they when the problems they cause start to mount up. Because I shouldn't have to keep fixing a business they want to keep me excluded from. You should just pay someone else that can fix it.
absolutely apple, Amazon and paypal not going to perform well
Absolutely correct.
Why not?
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