Stock indices are split to start the week as investors cross their fingers that lawmakers come to an agreement over the debt ceiling. Indeed, with the threat of a U.S. debt default continuing to loom over the country, investors are seemingly counting on legislators to step in before time runs out. Fears of a stock market crash are running hot ahead of Tuesday’s long-awaited meeting.

Optimism and Nervousness

Investors seem to have renewed hope for lawmakers ahead of the upcoming meeting between President Joe Biden and House Speaker Kevin McCarthy. Currently, the two are scheduled to meet Tuesday to negotiate terms of a mutually acceptable debt ceiling increase. If you recall, the two have been in a heated stalemate over the conditions surrounding a debt ceiling raise. Republicans have maintained they will only agree to raise the ceiling if their Democratic counterparts concede to sweeping spending cuts.

Treasury Secretary Janet Yellen has also outlined plans to meet with senior bankers to discuss the current debt ceiling crisis.

Jamie Dimon, the Chief Executive at JPMorgan Chase, recently stated the bank has launched something of a “war room” in preparation for the debt ceiling deadline. Apparently, the bank has some backup plans should legislators fail to raise the debt limit in time. Although, Dimon has also clearly outlined the danger posed to financial markets should the country default on its debts.

As it stands, stocks are relatively flat heading into the afternoon. The S&P 500 and Nasdaq Composite are each up less than half a percent, while the industrial-heavy Dow 30 is dipping into the red, less than 0.1%.

Stock Market Crash Fears Flood Markets Ahead of Debt Ceiling Negotiations

Not everyone is as confident about the upcoming debt ceiling negotiations. Indeed, Michael Wilson, Morgan Stanley’s Chief Investment Officer, recently stated he expects equity markets to undergo some undue volatility as the country approaches the so-called “X-date” –the day the treasury is expected to run out of its extraordinary measures funding.

Despite this, according to Wilson, most clients “believe it will ultimately get resolved, but not without some near-term volatility.” Unfortunately, even if the country manages to raise the ceiling ahead of the 11th hour, stock market volatility may still be an unfortunate repercussion of the uncertainty instilled in investors.

“The market is speaking loudly under the surface — it is bracing for further macro and earnings disappointments,” Wilson said. Investors have apparently begun shying away from regional banks and lesser-known cyclical stocks in the face of the institutional crisis.

“If Congress fails to do that, it really impairs our credit rating. We have to default on some obligation, whether it’s Treasuries or payments to Social Security recipients,” Yellen told Bloomberg on Friday. “That’s something America hasn’t done since 1789. And we shouldn’t start now. So we’ve not discussed what to do.”

Separately, investors may also be responding to a recent data report from New York. According to the New York Fed’s “Empire State” index, manufacturing activity sank 42.6 points in the Big Apple in May, the largest drop in more than three years.

On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.