U.S. stock futures slip as debt-ceiling fretting lingers

What’s driving markets

Futures were lower in early trading, extending Tuesday’s 1.1% sell-off for the S&P 500
SPX,
-1.12%
which came after reports suggested talks to extend the U.S. government debt ceiling were at an impasse.

“Positive sentiment is being restrained by shackles of uncertainty as the U.S. debt ceiling negotiations continue without agreement,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Adding to losses on Wednesday are sharp declines in European stocks, alongside a jump in U.K. government bond yields
TMBMKGB-02Y,
4.368%,
after data showed inflation in Britain slowing to 8.7% in April, but still higher than expected.

The stubbornly high price pressures in the U.K. pushed expectations for the Bank of England’s peak interest rate to 5.5%, from the current 4.5%. and reminded investors more broadly that the global battle against inflation was not done.

With that in mind, the minutes of the Federal Reserve’s policy meeting in May will be released at 2 p.m. Eastern.

Nvidia
NVDA,
-1.57%
will deliver its results after the closing bell. The chip company’s shares are seen as having benefited of late by excitement over AI, and so investors will be keen to hear whether their hopes match reality.

“The debt ceiling negotiations are still hanging over the U.S. equity market as dark clouds with no breakthrough yet, but with the VIX Index at around 18.5, the options market is still quite relaxed, but things can change fast as we approach the 1 June deadline,” said Peter Ganry, head of equity strategy at Saxo Bank.