Wall Street ends mixed ahead of debt ceiling talks
STORY: Wall Street finished mixed on Monday, helped by gains in Alphabet and Meta Platforms ahead of talks between U.S. President Joe Biden and top congressional Republican Kevin McCarthy about raising the U.S. debt ceiling.
The Dow fell 4-tenths of one percent, the S&P 500 closed roughly flat, and the Nasdaq rose half of one percent.
Monday's debt ceiling meeting comes just 10 days before the United States could face an unprecedented default.
EP Wealth Advisors Managing Director of Portfolio Strategy Adam Phillips says he expects the two sides to reach a deal but the fine print will be significant.
“What we have been telling our clients who obviously want to know and are paying close attention to these negotiations is that we do believe both sides know the cost and the danger of not doing anything. And so, we expect a deal to be made, but the devil is in the details. What we saw in 2011 is that markets actually fell after the debt ceiling was lifted and it fell because of the fact that part of that deal included quite a lot in spending cuts, actually 2 trillion in spending cuts. And so that type of austerity did not bode well for future economic growth. This time around, I think it's a question of whether we see spending cuts or spending caps and so we'll wait to see.”
Regional banking stocks got a lift from PacWest Bancorp, which agreed to sell a $2.6 billion real estate construction loan portfolio at a discount in a bid to improve its balance sheet. Its stock surged nearly 20-percent.
Shares of JP Morgan Chase fell nearly 1-percent despite saying its net interest income will rise $3 billion from its purchase of First Republic Bank, the third regional lender to fail since March.