Wall Street wavers, Treasury yields gain as debt ceiling debate plods on

  • Biden meets lawmakers on Tuesday on debt ceiling
  • Regional manufacturing data disappoints
  • Fed’s Bostic warns not to expect rate cuts this year

SYDNEY, May 15 (Reuters) – U.S. stocks searched for direction and benchmark Treasury yields rose as wavering optimism over a debt ceiling deal from Washington was overshadowed by a dour regional manufacturing report.

Futures suggested all three major stock indexes were primed for gains, but those gains quickly lost momentum after the opening bell, hot on the heels of a steeper-than-expected contraction in New York State manufacturing data.

With first-quarter earnings season approaching the finish line, market participants had little to focus on, outside of partisan wrangling on Capitol Hill as President Joe Biden and congressional Republicans square off over a debt limit deal.

“It continues to be a ‘two steps forward one step back’ market,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “Until we get a resolution about the debt ceiling, which I don’t expect before June 1st, I think we’ll see this volatility and a directionless market, especially as earnings wind down and there’s little else for investors to hold onto.”

The Dow Jones Industrial Average (.DJI) fell 28.92 points, or 0.09%, to 33,271.7, the S&P 500 (.SPX) lost 1.21 points, or 0.03%, to 4,122.87 and the Nasdaq Composite (.IXIC) added 11.21 points, or 0.09%, to 12,295.96.

European stocks pared initial gains and were last nominally higher as investors eyed ongoing U.S. debt ceiling negotiations and Turkey’s impending election runoff.

The pan-European STOXX 600 index (.STOXX) rose 0.12% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) gained 0.14%.

Emerging market stocks rose 0.39%. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 0.72% higher, while Japan’s Nikkei (.N225) rose 0.81%.

Longer-dated U.S. Treasury yields rose as lingering worries over slow-cooling inflation after Atlanta Fed President Raphael Bostic said he did not expect any interest rate cuts this year.

Benchmark 10-year notes last fell 11/32 in price to yield 3.5019%, from 3.463% late on Friday.

The 30-year bond last fell 31/32 in price to yield 3.832%, from 3.777% late on Friday.

The greenback inched lower against a basket of world currencies after touching a five-week high, while Turkey’s impending election run-off sent the lira to a near record low.

The dollar index fell 0.2%, with the euro up 0.21% to $1.0871.

The Japanese yen weakened 0.31% versus the greenback at 136.17 per dollar, while Sterling was last trading at $1.2507, up 0.40% on the day.

Oil prices rose on the prospect of tightening supplies due to OPEC+ production cuts and U.S. buying for reserves offset concerns over weakening demand.

U.S. crude rose 1.77% to $71.28 per barrel and Brent was last at $75.40, up 1.66% on the day.

Gold edged higher in opposition to the weakening dollar as the debt ceiling standoff wore on.

Spot gold added 0.2% to $2,015.10 an ounce.

Reporting by Stella Qiu; Editing by Sonali Paul

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