© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 14, 2023. REUTERS/Brendan McDermid
By Chuck Mikolajczak
NEW YORK (Reuters) – U.S. stocks ended the trading week on a subdued note on Friday as early gains dissipated after talks on the U.S. debt ceiling in Washington were suspended, rattling optimism that an agreement could be reached in the coming days to avoid a default.
Stocks have rallied in the past two sessions on growing confidence, a deal to raise the debt ceiling by $31.4 trillion could be reached in the coming days as the benchmark climbs further by 2%. But an early advance on Friday reversed on reports of a pause in talks as Federal Reserve Chairman Jerome Powell spoke at a monetary policy panel.
“The market seemed to come into this weekend thinking the talks were going to move towards a deal…but what you’re seeing now is Republicans saying, no, that’s not okay, and they’re just staged a walkout,” said Quincy Krosby, chief global strategist at LPL Financial (NASDAQ:) in Charlotte, North Carolina.
“It could be to put more pressure on the Democratic caucus and also take advantage of Biden being overseas. But that Friday afternoon headline is definitely not positive.”
According to preliminary data, the S&P 500 fell 6.02 points, or 0.14%, to end at 4,192.03 points, while the Nasdaq Composite fell 30.46 points, or 0.24%, to 12 657.90. The Dow Jones Industrial Average fell 111.03 points, or 0.33%, to 33,424.88.
The S&P 500 and Nasdaq posted their biggest weekly percentage gains since the last week of March.
The interest rate outlook remained uncertain. Powell said it’s still unclear if more rate hikes are needed as the central bank assesses the impact of past hikes, as evidenced by recent banking sector turmoil.
A CNN report also dampened sentiment that US Treasury Secretary Janet Yellen told bank CEOs on Thursday that more bank mergers may be needed after a series of bank failures.
Shares of regional banks, which were the first in the sector to feel the impact of the Fed’s tightening policy, fell, with the KBW Regional Banking Index down nearly 3% on the session. Still, the index rose nearly 6% on the week to end a three-week streak of declines as investors view the sector’s troubles as largely contained for now.
Shares of Morgan Stanley (NYSE:) lost ground after CEO James Gorman announced he would step down in the next 12 months.
Foot locker (NYSE:) Inc tumbled and suffered its biggest daily percentage decline since Feb. 25, 2022 after the shoe retailer cut its annual sales and profit forecast.
The warning also weighed on the Dow component Nike Inc (NYSE:), and under protection Inc. (NYSE:).
Foot Locker’s update concludes a week of caution from other retailers this week, including Target Corp (NYSE:), Home deposit Inc (NYSE:) and TJX Companies Inc (NYSE:), as consumers adjust to stubbornly high inflation and higher interest rates.
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