Investing.com -- U.S. stocks are seen opening lower Wednesday, adding to the previous session’s losses as ongoing debt ceiling negotiations fail to make progress, while investors await the release of the minutes of the last Federal Reserve meeting.
The major indices closed with hefty losses Tuesday, with the blue chip Dow Jones Industrial Average dropping 230 points, or 0.7%, while the broad-based S&P 500 fell 1.1% and the tech-heavy Nasdaq Composite dropped 1.2%.
This followed another round of unsuccessful talks between representatives of U.S. President Joe Biden and House Speaker Kevin McCarthy over raising the country’s $31.4 trillion debt limit.
Fears are growing that the animosity between the two sides will make a compromise difficult to reach before the government runs out of money to pay its bills, resulting in an unprecedented U.S. default, which would have severe economic repercussions globally.
Treasury Secretary Janet Yellen has said this so-called "X-date" could fall as soon as June 1.
This follows a series of hawkish comments by a number of officials over the last week. These continued on Tuesday when Federal Reserve Bank of Minneapolis President Neel Kashkari said policymakers may need to keep interest rates high for longer if inflation becomes entrenched.
Friday sees the release of the April personal consumption expenditure index reading, the Fed's preferred inflation gauge. However, the minutes from the central bank’s meeting earlier this month are due later in this session, when the Fed hiked once more, bringing the federal funds rate to a range of 5% to 5.25%.
There are more earnings to digest Wednesday, including from department store Kohl’s (NYSE: KSS ), chipmaker Nvidia (NASDAQ: NVDA ), cloud computing company Snowflake (NYSE: SNOW ) and clothing retailer American Eagle Outfitters (NYSE: AEO ).
Oil prices rose sharply Wednesday after industry data registered a chunky drop in U.S. inventories, pointing to tighter supplies as the U.S. driving season draws nearer.
Data from the American Petroleum Institute showed that crude stocks fell by about 6.8 million barrels in the week ended May 19, while gasoline inventories dropped by about 6.4 million.
If confirmed by official data later in the session, gasoline stocks would have declined for the third consecutive week to their lowest pre-Memorial Day levels since 2014.
Both benchmarks gained on Tuesday after Saudi Arabia's energy minister warned short sellers to "watch out", raising the possibility that a group of top producers will cut production once more when they meet in early June.
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