Stock indexes are mixed Tuesday after President Joe Biden and House Speaker Kevin McCarthy hashed out debt deal over the long weekend, one that now faces a key committee approval to get to the floor for a vote.
The tech-heavy Nasdaq is a standout, up more than 0.50% as an AI boom buoys the sector, shrugging off debt jitters. Netflix shares are changing hands at about $394, up 4%. Apple, Roku. Meta and Amazon are also higher. But Dow component Disney is off 0.8% at about $87 bucks with the DJIA dipping by over 100 points. Warner Bros. Discovery, Endeavor, Fox, Comcast, Lionsgate, Spotify and all of the exhibitors are trending lower. Paramount Global is up more than 4%.
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The S&P 500 is higher. The Russell 2000 started out in positive territory, but has slipped into the red.
Biden and McCarthy announced a deal on Saturday evening and have been busy defending it to both to the far right and progressive Democrats.
But passage could meet with some hurdles. A key indicator of where the deal stands will come later today, when the House Rules Committee meets at 3 pm ET today to vote on sending the deal to the full floor for a vote. One of its members, Rep. Chip Roy (R-TX), has come out against the legislation and has insisted that when McCarthy was seeking votes to become speaker, he made a deal that a bill would need unanimous support from GOP members of the Rules Committee to clear it. But McCarthy’s allies disputed that such a deal had been made.
Members of the House Freedom Caucus railed against the deal on Capitol Hill. “The Republican conference right now has been torn asunder, and we are working hard to try to put it back together this weekend by making it very clear that this bill gets stopped,” Roy said. “…Not one Republican should vote for this deal.” He earlier told Glenn Beck that if the bill passes, they should “figure out the whole leadership arrangement again,” per Politico.
On Fox News, Florida Governor Ron DeSantis criticized the deal as “inadequate,” but former President Donald Trump has yet to weigh in on it. At the CNN town hall a few weeks ago, he said that the GOP should let the U.S. government default, which would be an unprecedented instance in U.S. history.
Given the gravity of the issues at stake, the markets have been reacting to the conventional wisdom that the ceiling ultimately would be raised or suspended.
These are volatile days for the market for a few reasons. The debt deal is crucial of course, with the nation possibly unable to pay its bills as early as June 5 if there is no increase in the ceiling. But inflation and interest rates fears also continue to dog the market ahead of the Federal Reserve’s next meeting in mid-June. Employment numbers due out Friday could sway whether it raises rates yet again or not, continuing to fuel recession fears.
As McCarthy has touted the debt ceiling deal as a victory, Biden has taken a more cautious approach. The White House has emphasized how the agreement avoids the types of draconian cuts that would have threatened the president’s agenda. On Monday, Biden told reporters, “Look, one of the things I hear some of you guys saying is, ‘Why doesn’t Biden say what a good deal it is?’ Why would Biden say what a good deal it is before the vote? You think that is going to help me get it passed? No. That’s why you guys don’t bargain very well.”
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