Stocks dipped Tuesday as investors digested a lackluster forecast from Home Depot. Wall Street also turned its attention to a meeting between congressional leaders and President Joe Biden on the U.S. debt ceiling.
The Dow Jones Industrial Average closed below its 50-day average for the first time since March 30. The 30-stock index dropped 336.46 points, or 1.01%, to 33,012.14. The S&P 500 fell 0.64% to 4,109.90. The Nasdaq Composite declined 0.18% to 12,343.05.
Dow member Home Depot pulled back by 2.15% after the retailer reported disappointing quarterly revenue and cut its full-year guidance, as consumers postponed large home improvement projects.
April retail sales came in weaker than expected, rising 0.4% last month. That was lower than the 0.8% increase anticipated by economists polled by Dow Jones.
“Stocks have really been trading in this 3800 to 4200 range on the S&P 500 since the middle of November, and we’re kind of stuck there,” said U.S. Bank Wealth Management’s Bill Merz. “I think it’s reflective of the uncertainty that investors feel around what will happen on the policy front. How will the economy respond? Will consumers be able to continue spending through this period, and how long can that last?”
Investors are anxiously awaiting progress on debt ceiling negotiations. On Monday, Treasury Secretary Janet Yellen reaffirmed that the U.S. faced the possibility of default as early as June 1, the so-called X date, if a deal isn’t reached between the White House and Congress. On Tuesday, she doubled down on her warning to raise the limit immediately.
“A default would crack open the foundations upon which our financial system is built,” Yellen said Tuesday. “It is very conceivable that we’d see a number of financial markets break – with worldwide panic triggering margin calls, runs and fire sales.”
Biden maintained a more optimistic view of the ongoing negotiations over the weekend, while House Speaker Kevin McCarthy, R-Calif., said significant obstacles still remain. Biden has so far maintained that raising the debt ceiling is non-negotiable. McCarthy, however, has pushed for talks to broker a deal in which raising the debt limit would be tied to spending cuts.
On Tuesday, the White House said Biden will cut his upcoming international trip short as he deals with debt ceiling negotiations.