Wall Street was shaken, and the S&P 500 indexes erased their gains for this month on the last trading session in May as the debt ceiling vote looms.
The debt ceiling vote reaches a critical moment. Wall Street holds its breath in the final moments of the debt ceiling vote. The votes are starting, and it will probably be the event of this year. The bill was under debate in the House of Representatives on Tuesday, and a vote on its passage was expected later in the evening. The outcome of this vote could have significant implications for the nation’s fiscal policies and budget management.
On the stock market, fears of canceling the debt ceiling deal in the final minutes trumped Wall Street and investors.
This week, Wall Street indexes were mixed, swinging between minor gains and significant losses as fears of interest rate hikes arose.
Starting with the first index, the S&P 500 benchmark declined by 0.57%, moving to a negative month in terms of gains. The index erased its monthly gains on the last trading day of this month. The Nasdaq index fell by 0.46%, and the Dow Jones Industrial Average fell by 0.64%.
In keeping with the debt ceiling deal, lawmakers will determine in the next few hours whether they agree to lift the U.S. debt limits by $31.3 trillion. This action, in turn, is meant to prevent market downgrades and future financial crashes.
Still, it’s not certain, especially in a mixed market driven by other factors. That includes higher interest rates, labor numbers, and economic activities, all of which are meant to be taken into consideration.
At the moment, the major threat to the economy is higher interest rates and inflationary pressure. Inflation had declined to its lowest level since 2021, but in terms of market norms, the number was too high.
Investors remain cautious and pessimistic about the Fed’s monetary policy. Investors expressed concern about the potential consequences of the debt-limit deal and prepared themselves for the upcoming release of new employment data, causing a decline in US bond yields. The yield on the 10-year Treasury, which serves as a benchmark, decreased to 1.58%. Similarly, the yield on the two-year note fell to 1.04%, and the yield on the 30-year bond dropped to 0.86%.
Moving to increase indexes, the U.S. 10-year T-Note index rose by 0.4, and the largest increase on the bond market goes to the U.S. 3-month T-Note, by an increase estimated at 2.34%.
Moving to the oil market, crude oil prices are still below the $70 per barrel level, and the dollar index is gaining small momentum. However, the subject of Fed hikes and tightening monetary policy remains a troubling issue for investors.
Over the past few weeks, talk and rumors have been positive about an interest rate hike pause in the next meeting by June 13. A new estimation and survey show that marketers are expecting a 25 basis point interest rate hike in June.
This move might drive market uncertainty to a new level, especially with tight labor market numbers.