Stocks were mixed at market close on Tuesday amid investor hopes that the hard-won debt-ceiling deal will get through a divided Congress in a matter of days.
The S&P 500 (^GSPC) was flat, while the technology-heavy Nasdaq Composite (^IXIC) rose 0.32%, helped by artificial-intelligence mania. The Dow Jones Industrial Average (^DJI) dipped 0.15%.
US bond yields lost ground as investors assessed the potential impact of the debt limit deal. The yield on the benchmark 10-year Treasury dropped to 3.68%. The two-year note yield slipped to 4.45%, while that on the 30-year bond dropped to 3.89%.
Investors are now watching for the debt ceiling deal to get over its next crucial hurdle so it can be passed by lawmakers and avert a harmful default.
President Joe Biden and House Speaker Kevin McCarthy reached a tentative agreement on Sunday to raise the debt ceiling and the budget. The deal came after weeks of negotiations, slow progress that rattled markets.
Still, the agreement faces an early test Tuesday in the House Rules Committee, which is scheduled to consider the bill before an expected vote in the House on Wednesday, and before it goes to the Senate.
The administration has warned that Congress must raise the debt ceiling by June 5 — the so-called “X-date” — or risk tipping the US into the first default in its history.
WASHINGTON, DC – MAY 28: U.S. President Joe Biden delivers remarks on a deal struck yesterday with House Speaker Kevin McCarthy to raise the national debt limit in the Roosevelt Room of the White House on May 28, 2023 in Washington, DC. (Photo by Anna Rose Layden/Getty Images)
Even as the clock ticks down, Wall Street is playing the waiting game.
“There’s not much room for error but with moderates on both sides seemingly in line, then there can be a vocal minority on both sides against the deal and it still passes,” Jim Reid and colleagues at Deutsche Bank wrote to clients Tuesday morning. “We will see how lawmakers react as they come back from the holiday weekend.”
Investors will also have their eyes on the major economic release of the week: May’s…