NEW YORK (AP) — Another seemingly listless week on Wall Street came to a quiet close on Wall Street Friday, but big worries continue to roil under the surface.
The S&P 500 dipped 6.54 points, or 0.2%, to 4,124.08 to cap a sixth straight week where it moved by less than 1%. The Dow Jones Industrial Average slipped 8.89, or less than 0.1%, to 33,300.62, while the Nasdaq composite lost 43.76, or 0.4%, to 12,284.74.
Despite the seemingly placid moves for the overall market, big swings have swirled underneath the surface amid worries about a possible recession, high inflation and the U.S. government inching toward what could be a catastrophic default on its debt.
It's not just Wall Street that's concerned. Sentiment among U.S. consumers is tumbling, according to a preliminary survey by the University of Michigan. That's a worry because strong spending by consumers has been one of the main forces preventing a recession as the economy slows.
Joanne Hsu, director of the Surveys of Consumers, pointed to the looming June 1 deadline when the U.S. government could run out of cash to pay its bills unless Congress allows it to borrow more.
“If policymakers fail to resolve the debt ceiling crisis, these dismal views over the economy will exacerbate the dire economic consequences of default,” she said in a statement.
President Joe Biden and congressional leaders postponed a meeting set for Friday on the debt limit crisis to next week. The delay was billed as a sign of positive exchanges, and staff-level talks are expected to continue through the weekend.
One area under heavy pressure this week looking to stabilize was PacWest Bancorp’s stock. It’s been under heavy scrutiny as Wall Street hunts for the next possible U.S. bank to fail following three high-profile collapses since March.
PacWest fell 3% after flipping from a gain in the morning. A day earlier, it slid sharply after disclosing a flight of deposits from the prior week. Its stock lost 21% this past week.
Banks have been bending under the weight of much higher interest rates, which have caused some customers to pull deposits in search of higher yields while also dragging down prices for the investments that the banks hold.
Rates are so high because the Federal Reserve has been hiking them at a furious pace in order to drive down inflation. Reports this week suggested inflation is continuing to moderate from its peak last year, though it remains way too high for the comfort of households and regulators.
The hope on Wall Street is that easing inflation may convince the Fed to hold off on raising rates again at its next meeting in June. That would offer some breathing room to both the economy, which has slowed under the weight of higher rates, and to financial markets, where prices began falling long ago.