Wall Street mixed as investors focus on debt ceiling talks

Wall Street closed mixed on Monday, with the Nasdaq helped by gains in Alphabet and Meta Platforms, while the S&P 500 ended near flat as investors refrained from big bets ahead of a fresh round of talks about raising the U.S. debt ceiling.

President Joe Biden and top congressional Republican Kevin McCarthy were set to meet on Monday to discuss raising the federal debt ceiling, just 10 days before the United States could face an unprecedented default.

Investors are basically giving at least a 60:40 likelihood that they will come to a deal in time. A deal could simply be the extension, kicking it down the road to decide on a debt ceiling when they also discuss the budgets but later in September.

The S&P 500 (.SPX) edged up 0.02% to end at 4,192.63 points. The Nasdaq Composite Index (.IXIC) gained 0.50% at 12,720.78 points, while Dow Jones Industrial Average (.DJI) declined 0.42% to 33,286.58 points.

Comments by St. Louis Fed President James Bullard on Monday that the Federal Reserve may still need to raise its benchmark interest rate by another half-point this year pushed up the US dollar.

Investors will look for clues on monetary policy from a slew of Fed speakers and key data points this week such as the April personal consumption expenditure (PCE) index and durable goods. The PCE index reading, the Fed’s preferred inflation gauge, is due on Friday. As debt ceiling drama intensifies, mega-cap tech stocks have become Wall Street’s new favorite defensive trade.

Apple Inc (AAPL.O) dropped 0.55% after Loop Capital downgraded the iPhone maker’s stock to “hold” from “buy,” its first rating cut in five months according to Refinitiv data.

In a move perceived as ramping up U.S.-China trade tensions, Beijing barred chipmaker Micron Technology Inc (MU.O) from selling memory chips to key domestic industries, sending its shares 2.85% lower.

Regional banking stocks were lifted by news that PacWest Bancorp (PACW.O) has agreed to sell a portfolio of 74 real estate construction loans to a subsidiary of Kennedy-Wilson Holdings Inc (KW.N). PacWest shares surged almost by a fifth, leading stocks of some of the other regional banks’ higher.

Shares of larger lenders were subdued, with JPMorgan Chase & Co (JPM.N) 0.8% lower despite the company saying its net interest income will rise $3 billion as interest payments increase from its purchase of failed First Republic Bank this year.