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Biden to meet lawmakers on Tuesday for debt talks
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ONEOK falls after deal for Magellan Midstream
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NY Fed Manufacturing data for May drops more than expected
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Dow down 0.30%, S&P off 0.18%, Nasdaq flat
By Shreyashi Sanyal and Shristi Achar A May 15 (Reuters) - Wall Street's main indexes erased initial gains on Monday after manufacturing data amplified worries of a slowdown in the economy, tempering upbeat sentiment fueled by hopes of a deal to raise the U.S. debt limit as a deadline loomed.
The New York Federal Reserve's "Empire State" index on current business conditions dropped to a reading of 31.8 in May, against expectations of a 3.75 decline. "What you're seeing is an indication that people are a little worried about the strength of the economy, perhaps going into a recession earlier than maybe expected," said Robert Pavlik, senior portfolio manager at Dakota Wealth. This followed data on Friday that showed consumer sentiment slumped to a six-month low in May, and U.S. long-term inflation expectations jumped to the highest since 2011.
Focus will now turn to retail sales, weekly jobless claims and housing data expected through the week. Losses were limited by hopes of progress on a deal to raise the nation's $31.4 trillion borrowing limit.
President Joe Biden said over the weekend he expects to meet with congressional leaders on Tuesday and remained optimistic about agreeing a deal to raise the debt ceiling. The months-long standoff in Washington has added to global economic worries, as a new non-partisan congressional report cited "significant risk" of a historic default within the first two weeks of June. At 10:00 a.m. ET, the Dow Jones Industrial Average was down 98.62 points, or 0.30%, at 33,202.00, the S&P 500 was down 7.53 points, or 0.18%, at 4,116.55, and the Nasdaq Composite was up 0.98 points, or 0.01%, at 12,285.72. Shares of Meta Platforms Inc rose 0.8%, cushioning the Nasdaq's fall, after Loop Capital upgraded it to "buy" from "hold". Investors will also be tracking speeches by a host of Federal Reserve officials this week, including Chair Jerome Powell on Friday, for clues on potential rate cuts this year. Atlanta Fed President Raphael Bostic said on Monday he does not expect any interest-rate cuts this year as he does not see inflation going down as fast as market participants believe. However, Chicago Fed President Austan Goolsbee said his decision to support an interest rate hike at the meeting in May was a "close call" as he weighed the impact of credit tightening from recent bank stresses.
Oneok Inc fell 7.6% as it agreed on Sunday to buy
U.S. pipeline operator Magellan Midstream Partners in a
cash-and-stock deal valued at about $18.8 billion including
debt. Shares of Magellan jumped 14.9%.
Charles Schwab Corp added 2.8% after Raymond James
upgraded the financial services co to "outperform' from "market
perform" on its ability to attract new accounts.
Advancing issues outnumbered decliners by a 1.71-to-1 ratio
on the NYSE and by a 1.56-to-1 ratio on the Nasdaq.
The S&P index recorded five new 52-week highs and five new
lows, while the Nasdaq recorded 27 new highs and 63 new lows.
(Reporting by Shreyashi Sanyal and Shristi Achar A in
Bengaluru; Editing by Nivedita Bhattacharjee, Saumyadeb
Chakrabarty and Sriraj Kalluvila)
