Stock markets and the dollar ended the week lower on Friday after Republican lawmakers suspended negotiations on the debt ceiling following an apparent breakdown in talks.
The Dow Jones Industrial Average fell 109.28 points, or 0.3%, while the S&P 500 fell 6.07 points, or 0.1%, on Friday in what was Wall Street’s best week since March. The Nasdaq market also fell by 30.94 points (0.2%).
The three stock indices ended the week still higher overall, but fell on news that talks were stalling.
Stocks also appeared to have rebounded slightly after Federal Reserve Chairman Jerome Powell’s remarks on Friday suggested he might not raise rates at the next meeting. The Fed has consistently raised interest rates over the past year to keep inflation in check.
Meanwhile, the dollar fell about 0.4%.
The Treasury Department warned that the U.S. could default as early as June 1 if lawmakers cannot reach a deal to raise the debt ceiling.
House Speaker Kevin McCarthy (Republican, Calif.) said talks fell apart because the White House was unwilling to agree to spending cuts that Republicans had insisted in exchange for a vote to raise the debt ceiling.
“We need to get the White House moving, but there is no movement yet. So yeah, we have to pause,” he said.
He said negotiators need to agree on the outlines of the deal at least by the end of this week to give the bill time to pass the House and Senate by June 1.
Republicans are calling for significant cuts in federal spending as part of the deal. A bill to implement those cuts and raise the debt ceiling passed the House of Representatives in a partisan vote last month, but has stalled in the Senate.
President Biden and Democrats have opposed these cuts, and Mr. Biden has 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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