Major stock market indices are down on May 31 as investors await the fate of a debt ceiling deal hammered out by President Joe Biden and House Speaker Kevin McCarthy.
An hour before trading began, the Dow Jones, Nasdaq and S&P 500 were all down by about 0.4%.
Investors are also worried about China’s economy after Hong Kong’s market fell into bear market territory. The Chinese yuan is trading at 7.11 to the dollar, its lowest level of the year.
Stocks Are Down on Worry Street
While the debt ceiling deal is expected to pass the House today, agitation from conservative members has grown in recent days, creating uncertainty. If the deal fails to pass, there is concern the U.S. could default on its debts for the first time.
There are also concerns over the growing cold war between China’s government, which insists it will take back Taiwan by force, and the U.S., which has promised to support the island. Visits to Shanghai by Tesla (NASDAQ:TSLA) CEO Elon Musk and JPMorgan Chase (NYSE:JPM) CEO Jaime Dimon failed to dispel the gloom in China’s market.
Even the artificial intelligence (tech stocks, may be rolling over. Nvidia (NASDAQ:NVDA) was down 1.5% overnight, and Meta Platforms (NASDAQ:META) was also down. Smaller AI names like C3.AI (NYSE:AI) and Palantir Technologies (NASDAQ:PLTR) fell harder.) boom, which has brought enormous gains to the biggest
However, assuming the debt deal gets done, then the morning’s stock buyers should benefit. China’s troubles should also mean lower inflation, and if the Federal Reserve is able to reverse interest rate hikes later this year, happy days will be here again.
What Happens Next?
Expect slow trading until the House reaches its decision. At that point, we’ll know whether the bulls or bears were offside, and attention will return to inflation.
On the date of publication, Dana Blankenhorn held a long position in NVDA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.