Stocks fall as investors await inflation data, debt ceiling progress: Live updates

Stocks were under pressure Tuesday, with regional bank shares retreating, as investors readied for key inflation reports due later in the week and progress on the U.S. debt limit.

The S&P 500 pulled back by 0.2%, and the Nasdaq Composite dipped 0.5%. The Dow Jones Industrial Average traded flat with a 0.02% gain.

President Joe Biden is set to meet with House Speaker Kevin McCarthy Tuesday afternoon at 4 p.m. Both sides have cautioned that the meeting is simply a chance to have a conversation, with definitive progress on raising the debt limit unlikely. Biden and McCarthy remain at odds over the House Speaker’s caveat that a deal on raising the debt ceiling be tied to spending cuts. Biden maintains raising the debt ceiling is non-negotiable.

Treasury Secretary Janet Yellen said on CNBC Monday afternoon that failing to raise the debt ceiling would be an “economic catastrophe,” and regulators are not close to any policies that would limit short-selling regional bank stocks.

“Wall Street is hesitant to take on any major positions until we find out the outcome to both debt ceiling talks at the White House and on whether or not inflation is proving to be very sticky,” said Ed Moya, senior market analyst at Oanda. “No one is doubting that bank stress won’t be going away as lending conditions continue to tighten, reserve requirements will go up, which will lead to less 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) dipped 1%, as investors continued to fret over the state of the U.S. banking system.

Lucid, PayPal and Skyworks were all down after their quarterly reports were released. Meanwhile, Palantir jumped 14% on a strong earnings report and upbeat guidance.

The moves follow a lukewarm session that left the three major indexes little changed. The S&P 500 finished 0.05% higher, while the Nasdaq Composite ended with a gain of nearly 0.2%. The Dow was the underperformer of the session, closing almost 0.2% lower.

Traders are also looking ahead to April’s consumer price index report slated for Wednesday and the producer price index on Thursday for the newest data on the path of inflation.