“Stocks Decline as Home Depot Disappoints and US Debt Ceiling Looms: Market Analysis and Federal Reserve Statement”

Investing.com – Wall Street’s major indices saw collective declines during these moments of trading on Tuesday, as investors digested lackluster expectations from Home Depot (NYSE:)). Wall Street also turned its attention to a meeting between congressional leaders and President Joe Biden on the US debt ceiling.

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lowered firm Home Depot Inc (HD.N) on Tuesday released its annual sales forecast and predicted a sharper-than-expected drop in profits, raising concerns about inflation-wary consumers cutting discretionary spending as a big earnings week kicks off for US retailers.

Shares of the largest U.S. home improvement chain, which also blamed a damp start to the spring and lower lumber prices for a loss in first-quarter sales, fell about 4%, while shares of smaller rival Loews Companies Inc (NYSE:) fell nearly 3%.

Meanwhile, April retail sales rose 0.4% last month, less than the 0.8% increase expected by economists in a Dow Jones poll.

Investors are eagerly awaiting progress on a deal to raise the debt ceiling before June 1, the earliest the Treasury Department said the United States could default on its debt obligations. Treasury Secretary Janet Yellen said last week that no deal could lead to “economic disaster”.

On Monday, Yellen reiterated that the US faces the possibility of default as early as June 1, the so-called Date X, if no deal is reached between the White House and Congress.

“Waiting until the last minute to suspend or increase the debt limit could cause serious harm to business and consumer confidence, raise short-term borrowing costs for taxpayers, and negatively affect the credit rating of the United States,” Yellen said.

Biden maintained a more optimistic view of the ongoing negotiations over the weekend, while House Speaker Kevin McCarthy, R-Calif., said significant hurdles remain.

Biden has so far maintained that raising the debt ceiling is non-negotiable. But McCarthy has pushed for talks to broker a deal to raise the debt ceiling linked to spending cuts.

“We are concerned that the stock market is not adequately pricing in the risk that Democrats and Republicans will fail to reach an agreement to raise the debt ceiling, which would be disastrous for the US economy,” Anthony Chukumba of Loop Capital wrote in a letter on Tuesday.

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Federal Reserve statement a while ago

Cleveland Bank President Loretta Mester said on Tuesday that the US central bank remains committed to lowering inflation, noting that the current rate may not be the final one.

“The Fed is committed to returning inflation to its 2 percent target,” Mester said in a letter text.

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And she continued: The data shows us that interest rates are not sufficiently restrictive.

“I need to see more evidence of inflation going down, as prices are still high, and we have to stick with what we’re doing,” she added.

“We all know that high inflation makes it very difficult for people to make ends meet,” she emphasized, adding, “It is a particularly burdensome burden for people and companies that have fewer resources.”

“I don’t think the current interest rate is final. However, there are four weeks left until the next meeting, we should see more data.”

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