S&P 500 turns negative as chip-led rally fades; Debt-ceiling bill in focus
Investing.com -- The S&P 500 gave up gains Tuesday, as investors mulled over the prospect of Congress passing the debt ceiling bill before the June 5 deadline to avoid a default.
The S&P 500 was down 0.3%, the Dow Jones Industrial Average fell 0.6%, or 161 points lower, the Nasdaq fell 0.1%.
The debt ceiling bill -- will first have to clear The House of Representatives Rules Committee Tuesday before proceeding to voting in the House on Wednesday and Senate later this week -- will require votes from both sides of the political aisle to pass into law before June 5, when the Treasury has warned the U.S. would run out of money.
The debt-ceiling agreement, or “Fiscal Responsibility Act,” which would suspend the debt limit until 2025, is expected to pass before the deadline.
“Now that a deal has been reached, it seems very likely to pass both chambers of Congress in the coming week,” Goldman Sachs said in a note.
Beyond Capitol Hill, a slump in consumer staples and energy was a drag on the broader market, with the latter pressured by plummeting oil prices amid uncertainty about potential output at the upcoming OPEC+ June 4 meeting.
EQT Corporation (NYSE: EQT), APA Corporation (NASDAQ: APA), and Devon Energy Corporation (NYSE: DVN) were among the biggest decliners in energy on the day.
Tech stocks lost some shine after chip stocks gave up intraday gains despite NVIDIA Corporation's (NASDAQ: NVDA) latest surge briefly pushing the chipmaker’s market cap above $1 trillion for the first time ever.
AI-related names including C3 Ai Inc (NYSE: AI), Palantir Technologies Inc (NYSE: PLTR), and Uipath Inc (NYSE: PATH) were also in the ascendency.
Consumer discretionary, meanwhile, was boosted by a more than 3% rise in Tesla (NASDAQ: TSLA) as the electric vehicle maker’s chief executive Elon Musk arrived in China, which is a key region for the company amid growing domestic competition
“Playing nice in the sandbox in Beijing is something the Street is laser focused on to make sure there are no disruptions to Tesla's expansion and tentacles within China for the coming years as this remains the #1 EV market in the world,” Wedbush said in a note.
On the economic front, data showing consumer confidence in May topped economists’ forecast, underpinned ongoing bets for another Federal Reserve rate hike next month.
“The confidence data suggests that the risks are tilting toward another Fed rate hike in June, and at a minimum, a continued push forward with hawkish policy guidance,” Jefferies said in a note.