Stocks and dollar dip after GOP pauses debt ceiling talks

·2 min read

The stock market and the value of the dollar dipped to end the week after GOP lawmakers paused debt ceiling talks on Friday following an apparent breakdown in negotiations.

The Dow Jones Industrial Average fell by 109.28 points, equivalent to 0.3 percent, while S&P 500 dropped 6.07 points, or 0.1 percent, on Friday after Wall Street’s best week since March. Nasdaq also dropped 30.94 points, or 0.2 percent.

The three stock indexes still finished with an overall gain for the week, but they shrunk following the news of the talks hitting a roadblock.

The stocks appear to have also recovered somewhat following comments from Federal Reserve Chairman Jerome Powell on Friday that potentially indicated that the Fed will not raise interest rates at its next meeting. The Fed has consistently raised rates over the past year to try to get inflation under control.

The dollar meanwhile fell by almost 0.4 percent.

The Treasury Department has warned that if lawmakers do not reach a deal to raise the debt ceiling, the United States could default on its debts as soon as June 1.

House Speaker Kevin McCarthy (R-Calif.) said the talks broke down because the White House was not willing to agree to spending cuts that Republicans have insisted upon in exchange for voting to raise the debt limit.

“We’ve got to get movement by the White House, and we don’t have any movement yet. So, yeah, we’ve gotta pause,” he said.

He has said negotiators need to at least agree on a broad framework for a deal by this weekend for the bill to have time to advance through the House and Senate by June 1.

Republicans have pushed for significant cuts to federal spending as part of a deal. A bill to implement those cuts and raise the debt ceiling passed the House in a party-line vote last month, but it has not advanced in the Senate.

President Biden and Democrats have opposed those cuts, with Biden having previously called for a clean bill to raise the debt ceiling and address other issues separately.

The Associated Press contributed to this report.

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