Wall Street slips as consumers fret over prices, debt ceiling

seemingly listless week on Wall Street came to a quiet close on Friday, but big worries continue to roil under the surface.

The Standard & Poor’s 500 dipped 6.54 points, or 0.2%, to 4,124.08 to cap a sixth straight week during which it moved less than 1%. The Dow Jones industrial average declined 8.89 points, or less than 0.1%, to 33,300.62, while the Nasdaq composite lost 43.76 points, or 0.4%, to close at 12,284.74.

Despite the seemingly placid moves for the overall market, big swings have swirled underneath 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 raises its borrowing limit.

“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 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 as staff-level talks are expected to continue through the weekend.

One area under heavy pressure this week was PacWest Bancorp’s stock. It’s been under scrutiny as Wall Street hunts for the next possible U.S. bank to fail after three high-profile collapses since March.

PacWest fell 3% after flipAnother ping from a gain in the morning. Its stock lost 21% this 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 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 the economy, which has slowed under the weight of higher rates, and to financial markets, where prices began falling long ago.

One potential wild card arrived in Friday’s report on consumer sentiment. It suggested U.S. households are girding for 3.2% inflation over the long run. That’s higher than last month’s expectation of 3% and the highest level since 2011.

One worry at the Fed is that if expectations for high inflation become entrenched, that could change behaviors by shoppers and others across the economy and worsen inflation.

Treasury yields rose in the bond market after the consumer sentiment report. The yield on the 10-year Treasury wiped out an earlier dip and climbed to 3.47% from 3.39% late Thursday. It helps set rates for mortgages and other key loans.

The two-year yield, which moves more on expectations for the Fed, rose to 3.99% from 3.90%.

News Corp. rose 8.5% after it reported a milder drop in profit and revenue for the latest quarter than analysts expected.