Stocks mixed amid debt-ceiling talks, retail sales data

Wall Street is watching for signs of movement in the debt-ceiling impasse, with a meeting between President Joe Biden and House Speaker Kevin McCarthy set for Tuesday afternoon in Washington.

US stocks were mixed during midday trading on Tuesday as investors digested fresh economic data and focused on negotiations over the debt-ceiling stalemate, with talks set to resume later in the day.

The S&P 500 edged down 0.18%, while the Dow Jones Industrial Average fell 0.51%, declining by more than 160 points. The technology-heavy Nasdaq Composite gained 0.28%.

Everyone is extremely confident that a default will not happen but the closer we get to the deadline, the more we’ll see those risks being priced into the markets.

Treasury Secretary Janet Yellen sounded the alarm once again on Monday if Congress has not raised or suspended the debt limit by early next month. She wrote in a letter to lawmakers that “it would cause severe hardship to American families”, with the US potentially defaulting as soon as June 1.

Tuesday’s Biden – McCarthy meeting will include Senate Majority Leader Chuck Schumer, Senate Minority Leader Mitch McConnell and House Democratic Leader Hakeem Jeffries. It follows a White House meeting last week that failed to produce a breakthrough.

Meanwhile, investors turned their attention to economic data, which showed that retail sales rose 0.4% in April, representing only half of the growth that Wall Street had expected. Economists surveyed by Bloomberg called for 0.8% rise over the prior month after a surprise drop in March.

Separately, on the housing front, confidence among US single-family homebuilders hit the highest level in 10 months, improving in May for the fifth consecutive month, as limited home stock helped to renew optimism for the sector.

Also on Wall Street’s docket are earnings from retailers such as Walmart (WMT) and Target (TGT), along with China’s tech giants Alibaba (BABA) and Tencent (TCEHY).

Home Depot (HD) kicked off, posting first-quarter earnings that mostly missed estimates, while same-store sales came in well below forecasts. The home-improvement giant cut its guidance for fiscal full-year sales growth. Shares dropped more than 1% Tuesday. Government bond yields were higher. The yield on the US 10-year Treasury note gained to 3.53%, while the yield on the two-year note rose to 4.09%.

In Washington, former executives from Silicon Valley Bank and Signature Bank are expected to testify before the Senate on Tuesday.

Former Silicon Valley Bank CEO Greg Becker released his prepared remarks. He plans to apologize for the bank’s failure, describing its takeover as “personally and professionally devastating” while noting “I am truly sorry.”

Regional bank stocks were moving higher Tuesday. PacWest Bancorp (PACW) shares dipped more than 3%, while shares Western Alliance Bancorporation (WAL) rose more than 3%.

In single stock moves, Horizon Therapeutics (HZNP) shares sank 15% amid reports the Federal Trade Commission is preparing to file a lawsuit as early as Tuesday to block Amgen’s (AMGN) $27.8 billion deal to buy the drugmaker.

Warren Buffett’s Berkshire Hathaway raised its commitment to Bank of America (BAC) and bought new stock in Capital One (COF), according to filings. COF is up more than 2% Tuesday.

Shares of Baidu, Inc. (BIDU) gained after the Chinese search-engine giant posted first-quarter earnings that beat analysts’ estimates as revenue rose 10%.