Market participants are riveted to painstaking talks in the debt ceiling deal. Investors are unnerved about the lingering standoff while the US government is approaching the deadline. Today investors will be alert to a speech by Treasury Secretary Janet Yellen and the minutes of the Fed’s latest policy meeting. These events will act as market catalysts today.

The benchmark stock indices closed yesterday with steep losses. A sell-off of risky assets was triggered by the lack of progress in the debt ceiling talks and expectations of further monetary tightening. The Dow Jones extended its slide and shed another 0.69%. The Nasdaq tumbled by 1.26%. The S&P 500 closed 1.12% down at about 4,145,
The major stock indices traded in the red in the New York pre-market. Futures on the stock indices slipped by 0.2-0.27%. The S&P 500 is expected to sink to 4,110 and even to 4,070 in case of bad news. A good information background could push the index up to 4,180.
The market expressed the risk-off yesterday due to the lack of progress in the talks. Representatives of US President Joe Biden and Republicans in Congress ended another round of the talks with nothing. With the deadline getting closer every day, “nothing” is becoming an alarming signal.
A similar situation has already happened in 2011, but the default was averted with the last-minute agreement. Now, the markets do not believe in the US default. Still, analysts underscore a different macroeconomic background and warn that the looming default might have an unpredictable impact on the economy, even if a deal is settled.  
Such fundamentals are complemented by hawkish comments from Fed policymakers James Bullard and Neel Kashkari who advocated for further monetary tightening and a rate increase to 6%. All in all, market sentiment was gloomy on Wall Street.
As for the economic calendar, the survey by S&P Global showed that the composite PMI improved to a 13-month high in May amid robust expansion in the service sector. The survey is the latest proof that the US economy remains resilient in the early second quarter despite mounting recession risks. This is an argument for raising interest rates.
As for corporate news, Broadcom shares rose by 1.2% after the chip maker struck a multi-billion dollar deal with Apple to use US-made chips. Apple shares fell by 1.5%.
Shares of Zoom Video fell by more than 8% after the video conferencing platform reported its slowest quarterly revenue growth.
Shares of regional lenders extended Monday's gains, led by PacWest's 7.9% gain.
The news on the corporate front was not enough to prop up market optimism. Stocks of most high-tech giants incurred losses. Stocks of oil companies traded mostly higher.
Yields of Treasuries with short maturity carried on with its growth today. Optimism over the debt ceiling agreement is fading as the two sides are "close on a number of issues" but no deal yet. The odds are that the deal could be nailed down this week or at the beginning of the next week.
Besides, the Treasury has asked federal agencies if they can defer upcoming payments. This request worsened the sense of crisis.
Today, after the opening bell, Treasury Secretary Janet Yellen will make her comments. Her speech in the context of the national debt ceiling is likely to overshadow the publication of the Fed minutes later.
At the same time, the minutes could become an additional catalyst for market sentiment. Indeed, the latest statements by the Fed hawks and the upbeat PMIs indicate the prospects that interest rates could exceed 6%.
Some corporate news could encourage stock investors today. The performance of chip maker Nvidia could support or cook down the hype about artificial intelligence. Meanwhile, Nvidia shares slipped by 1.0% ahead of its quarterly financial report.

Shares of Urban Outfitters jumped by 11.0% as the clothing retailer posted upbeat first-quarter results, boosted by strong demand and lower inventory levels.
The US dollar index rallied to 103.7 earlier today but pulled back from this level later on. The index settled at 103.5 in the New York pre-market. The intraday corridor for the instrument is seen between 103.1 and 103.9.


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