“U.S. Stock Indices Slide as Investors Brace for Key Inflation Reports & Debt Ceiling Talks”

Investing.com – U.S. stock indices came under significant pressure on Tuesday, with regional bank stocks sliding, as investors braced for key inflation reports due on Wednesday.

US President Joe Biden is scheduled to meet House Speaker Kevin McCarthy today. Both sides indicated that the meeting is an opportunity for talks on the debt ceiling. Biden and McCarthy are still at odds over the House Speaker’s warning against linking the debt ceiling deal to spending cuts, as Biden asserts that raising the debt ceiling is not negotiable.

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The debt ceiling and the banking crisis

Treasury Secretary Janet Yellen told CNBC Monday afternoon that failure to raise the debt ceiling would be an “economic catastrophe,” and regulators have not introduced any policies that would curb shorting of regional bank stocks.

“Wall Street remains confused as it awaits the outcome of the debt ceiling talks at the White House and whether or not inflation will remain high,” said Ed Moya, senior market analyst at OANDA.

He added, “No one doubts that the banks’ pressure will not disappear as lending conditions continue to tighten, which will lead to fewer loans and a weaker economy.”

PacWest shares fell 6% after a volatile session in which the regional bank rose more than 3%. The SPDR S&P Regional Banking ETF (KRE) fell 1%, as investors continued to worry about the state of the US banking system.

The moves come on the heels of a lackluster session that left the three major indices little changed. The S&P 500 ended up 0.05%, while closing with a gain of nearly 0.2%. The Dow Jones was a lesser performer of the session, closing down nearly 0.2%.

Earnings forecast

US stock indices were also hit by a slew of tough earnings forecasts from companies like Paypal and supplier Apple Skyworks.

Shares of PayPal (NASDAQ:) Holdings fell 10.5% and led declines in the benchmark S&P 500 index after the company cut its earnings forecast.

Skyworks Solutions Inc shares fell 6.9% after it expected revenue and profits for the current quarter to be lower than estimates.

Other Apple (NASDAQ:) suppliers including Qualcomm, Broadcom, Qorvo and Corning fell between 0.9% and 2%. The Philadelphia SE Semiconductor Index (.SOX) fell 1.8%.

Markets await an update on the debt ceiling from a meeting between US President Joe Biden, Republican House Speaker Kevin McCarthy and other congressional leaders at the White House later in the day.

Short-term yields jumped sharply as investors sold bonds due in early June. This affected shares of high-growth companies, including Apple Inc and Microsoft Corp, which fell about 0.3% each.

Pointers now

It fell 0.1 percent to 33,590 points.

It fell by 0.35 percent to 4,123 points.

While the compound decreased by 0.45 percent to 12202 points.

markets now

It rose by 0.3% at $2,026 an ounce.

While it settled at 2033 dollars.

While it increased by 0.3%, at 101.47 points.

It fell 1.3% to $76 a barrel.

Texas crude fell by 1.28% to $72.17 a barrel.

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