Debt talks between Biden and McCarthy have gone from no progress to productive in the last 7 days and US stock market has experienced a roller coaster trend.
Here’s the timeline of the negotiations between Biden and McCarthy:
May 16: McCarthy Said There Was No Progress on Debt Ceiling Talks
Details: House Speaker Kevin McCarthy said Monday there’s been “no progress” on debt ceiling talks ahead of a meeting with President Joe Biden on Tuesday at the White House, as the country pushes closer to a crisis over the need to raise its legal borrowing limit.
Compounding pressure on Washington to strike a deal, the Treasury Department on Monday left unchanged a deadline as soon as June 1 when the nation will have exhausted its ability to cover its debt payments, though Secretary Janet Yellen also suggested the so-called “X-date” could move days or weeks later than the estimate.
Market Performance: The Dow Jones Industrial Average fell 1.01%, the S&P 500 lost 0.64%, and the Nasdaq Composite dipped 0.18% last Tuesday.
May 17: Biden and McCarthy Reiterated Their Determination to Strike a Deal Soon
Details: President Joe Biden and Kevin McCarthy on Wednesday reiterated their determination to strike a deal soon to raise the debt ceiling and avoid an economically catastrophic default.
"Definitely the catalyst is when you get both Biden and McCarthy to say that we are close the assumption is they probably will go with some kind of agreement," said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
Market Performance: The Dow Jones Industrial Average rose 1.24%, the S&P 500 gained 1.19%, and the Nasdaq Composite added 1.28% last Wednesday.
May 19: Debt Ceiling Negotiations Paused Until Biden Returns
Details: Negotiations on raising the debt ceiling came to an abrupt halt as Republican negotiators walked out of a closed-door meeting with White House officials, leaving the two sides at a stalemate heading into a critical weekend.
Rep. Garret Graves, R-La., who is leading negotiations for House Speaker Kevin McCarthy, told reporters it's time to "press pause" on negotiations "because it's just not productive." He said negotiations became “just unreasonable” and that it was unclear when talks would resume.
Market Performance: The Dow Jones Industrial Average fell 0.33%, the S&P 500 lost 0.14%, and the Nasdaq Composite dropped 0.24% last Friday.
Last week, the Dow gained 0.38%, the S&P 500 climbed 1.65% and the Nasdaq advanced 3.04%. The S&P 500 and Nasdaq notched their biggest weekly percentage gains since the final week of March.
May 22: Productive Discussion but No Debt Deal
Details: Joe Biden and Kevin McCarthy on Monday evening failed to reach a fiscal deal to avoid a default on US debt, but talks were set to continue, suggesting an agreement could be within reach.
“I think the tone tonight was better than any other time we’ve had discussions . . . we still will have some philosophical differences, but I felt it was productive,” McCarthy said, “We know the deadline. I think the president and I are going to talk every day . . . until we get this done.
Biden later issued his own statement with a similar assessment. “I just concluded a productive meeting with Speaker McCarthy about the need to prevent default and avoid a catastrophe for our economy, we reiterated once again that default is off the table and the only way to move forward is in good faith toward a bipartisan agreement.”
Market Performance: Nasdaq Futures rose 0.49% at most on Monday evening.
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