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Futures dip as debt ceiling impasse keeps investors on edge

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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 4, 2023. REUTERS/Brendan McDermid

U.S. stock index futures slipped on Wednesday as yet another round of talks between the White House and Republican representatives over raising the debt ceiling failed to make a breakthrough, keeping investors on edge.

The lack of progress in talks to raise the $31.4 trillion borrowing limit ahead of the June 1 deadline has weighed on Wall Street, with its benchmark indexes ending the previous session sharply lower.

Shorter-dated Treasury yields continued to rise, with yields on the 1-month bond hitting another record high at 5.8920%, as worries about a possible government debt default rise.

“Optimism over a debt ceiling deal is getting tired out as the two parties are ‘close on a number of issues’ but we still haven’t got a deal,” Mohit Kumar, chief financial economist at Jefferies said in a note.

“Odds of a deal by end of this week or early next week are looking good, but its politics, so accidents can happen.”

Investors also await minutes from the Federal Reserve’s May 2-3 meeting, due later in the day, to assess the central bank’s interest-rate path.

At 7:10 a.m. ET, Dow e-minis were down 124 points, or 0.37%, S&P 500 e-minis were down 14.75 points, or 0.35%, and Nasdaq 100 e-minis were down 48.5 points, or 0.35%.

Among early movers, Agilent Technologies Inc (A.N) shares plunged 9.4% in premarket trading after the company cut its annual sales and profit forecasts.

Chipmaker Nvidia Corp (NVDA.O) dipped 1.0% ahead of its quarterly earnings after markets close.

PacWest Bancorp (PACW.O) rose 7.3% as the regional lender sold its property lending division to real estate financing firm Roc360, seeking to bolster confidence in its financial health.

Among mid-cap retail earnings, Kohl’s Corp (KSS.N) advanced 10.8% as the department store chain reaffirmed its annual forecast even as first-quarter sales missed estimates.

Urban Outfitters Inc (URBN.O) jumped 11.0% as the apparel retailer posted upbeat first-quarter results, boosted by strong demand and leaner inventory levels.

VF Corp (VFC.N) gained 2.9% after beating fourth-quarter profit and sales estimates, helped by strong demand for its North Face brand.

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