After an initial move to the upside, stocks have given back ground over the course of the trading session on Monday. The major averages have pulled back well off their highs of the session and are currently turning in a mixed performance.
The Nasdaq remains up 91.28 points or 0.7 percent at 13,066.97 after reaching its best intraday level in nine months. The S&P 500 is also up 8.96 points or 0.2 percent at 4,214.41, but the Dow is down 111.87 points or 0.3 percent at 32,981.47.
The initial strength on Wall Street came following news President Joe Biden and House Speaker Kevin McCarthy, R-Calif., reached an agreement in principle to raise the debt ceiling and avoid a potentially disastrous default by the U.S. government.
Biden called the deal an “an important step forward that reduces spending while protecting critical programs for working people and growing the economy for everyone.”
“The agreement represents a compromise, which means not everyone gets what they want. That’s the responsibility of governing,” Biden said.
He added, “And, this agreement is good news for the American people, because it prevents what could have been a catastrophic default and would have led to an economic recession, retirement accounts devastated, and millions of jobs lost.”
Meanwhile, McCarthy accused Biden of wasting time by refusing to negotiate for months but said they have reached an agreement that is “worth of the American people.”
McCarthy claimed the debt limit agreement “stops Democrats’ reckless spending, claws back unspent COVID funds, and blocks Biden’s new tax schemes.”
A source familiar with the negotiations told CNN the agreement in principle will raise the debt ceiling for two years and keep non-defense spending roughly flat for fiscal 2024 and increase it by 1 percent in fiscal year.
The deal also reportedly includes White House concessions on work requirements for people receiving food stamps.
The source told CNN the agreement reached phases in food stamp time limits on people up to age 54 that will then sunset in 2030, while also exempting veterans and the homeless from these limits.
Biden said negotiating teams will finalize the legislative text over the next day and urged both the House and Senate to pass the agreement “right away.”
The agreement is likely to face opposition from some Republicans who were seeking bigger spending cuts, potentially prolonging the process of passing the bill.
McCarthy told reporters Saturday evening that he expects the GOP-controlled House to vote on the agreement on Wednesday.
The last-minute agreement comes as lawmakers purportedly face a June 5 deadline, when Treasury Secretary Janet Yellen has warned the U.S. will no longer be able to pay its bills.
Buying interest has waned over the course of the session, however, as traders look ahead to the monthly jobs report on Friday amid concerns about further interest rate hikes.
Oil service stocks have shown a substantial move to the downside on the day, dragging the Philadelphia Oil Service Index down by 2.6 percent.
The weakness in the sector comes amid a steep drop by the price of crude oil, with crude for July delivery plunging $2.76 to $69.91 a barrel.
Significant weakness is also visible among steel stocks, as reflected by the 2.2 percent slump by the NYSE Arca Steel Index.
Tobacco, oil producer and gold stocks are also seeing considerable weakness, while networking, semiconductor and computer hardware stocks have shown strong moves to the upside.
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Tuesday. Japan’s Nikkei 225 Index rose by 0.3 percent, while China’s Shanghai Composite Index inched up by 0.1 percent.
Meanwhile, most European stocks have moved lower on the day. While German DAX Index has bucked the downtrend and inched up by 0.1 percent, the French CAC 40 Index and the U.K.’s FTSE 100 Index are both down by 1.0 percent.
In the bond market, treasuries have shown a strong move back to the upside following recent weakness. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 8.9 basis points at 3.721 percent.
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