S&P 500 closes 1% lower Tuesday as debt ceiling talks drag on in Washington: Live updates

Stocks sold off on Tuesday as debt ceiling negotiations pressed on.

The S&P 500 dropped 1.12% to settle at 4,145.67, while the Nasdaq Composite shed 1.26% to close at 12,560.25. The Dow Jones Industrial Average lost 231.01 points, or 0.69%, to finish at 33,055.57.

— Samantha Subin

Consumer staples and utility stocks are vulnerable to this month's backup in 10-year and 30-year Treasury yields, said Chris Verrone, head of technical and macro research at Strategas Securities.

"Rates have continued to show some life over the last few weeks, and with upward pressure on yields has come downward pressure to Staples and Utilities both of which traded to multi month relative performance lows" on Monday, Verrone wrote in a note Tuesday. Utility stocks are faring worse than staples, "spending much of the last 6 months below the 200-day [moving average] and home to some pronounced top formations at the individual stock level."

Ten-year Treasury note yields touched 3.725% on Tuesday, the highest since March 13, and about 46 basis points higher just since April 6. A basis point is 1/100th of a percentage point.

Meanwhile, the S&P 500 Utility Index is down almost 5% in May (second worse only to energy stocks), S&P 500 Consumer Staples stocks are off by 4.2% in May, while the S&P 500 Index is down only 0.5% this month.

— Scott Schnipper, Michael Bloom

BlackRock debuted two actively managed ETFs on Tuesday, managed by two of the asset management giant's top investors.

The BlackRock's Flexible Income ETF (BINC) is managed by Rick Rieder, the firm's CIO of global fixed income. The actively managed fund has a net expense ratio of 0.40%, and is aiming for a yield of 7%.

BlackRock also debuted an active equity fund. The BlackRock Large Cap Value ETF (BLCV) is managed by Tony DeSpirito, the firm's global CIO of fundamental equities.

— Jesse Pound

Silver futures are down more than 5% over the past month, but Citi thinks this is a buying opportunity.

"Silver prices have retraced below $24/oz ... as weak economic data have undermined confidence in China's economic rebound. Having said this, our trade recommendation remains up 4.8%, and we see this pullback as a buying opportunity and reiterate our call for silver to hit $30/oz by year-end," wrote Citi's Viswanathrao Kintali. "We think this is achievable purely in response to a US growth rollover, however a major China easing would be a bullish kicker for the trade."

— Fred Imbert, Michael Bloom

Casino stocks Caesars, MGM and Wynn were all down more than 5% in the final hour of Tuesday's session.

Bloomberg reported Monday morning that China will likely see a peak of 65 million Covid infections a week in its next wave toward the end of June, citing a senior health official. The official said the country should see around 40 million infections per week by the end of May before reaching the peak.

— Alex Harring

Shares of a slew of Covid-19 vaccine makers surged on Tuesday.

Moderna popped 9.4%, while BioNTech and Pfizer jumped gained 10.1% and 2.6%, respectively.

The moves came amid reports of a potential new wave of Covid-19 infections in China that could lead to millions of new cases each week.

— Samantha Subin

News that Choice Hotels may acquire Wyndham Hotels & Resorts pushed shares of the latter to jump 7.4%, according to a report from The Wall Street Journal.

Shares of Choice Hotels fell 3.6% on the news. The two budget hotel franchises are currently in serious talks, according to the report.

— Hakyung Kim

Stocks traded near their lows as the final hour of trading commenced.

The Dow was last down about 183 points, or 0.6%. The S&P 500 lost 0.9% and Nasdaq Composite traded 1.1% lower.

— Samantha Subin

Broadcom is the "most underappreciated AI beneficiary" after its deal with Apple, according to Bank of America.

Analyst Vivek Arya hiked his price objective on the stock after Apple on Tuesday announced a multibillion-dollar deal with Broadcom for 5G radio frequency components made in the U.S., saying it removes an "overhang" on the stock.

"We believe this is a positive development as it removes one key overhang on AVGO stock – namely the risk of Apple's insourcing of connectivity components – surfaced in media reports earlier this year," Arya wrote in a Tuesday note.

Shares added about 2% during Tuesday's trading session.

Read more on the call here.

— Sarah Min

Some House Republicans on Tuesday raised skepticism over Treasury Department Secretary Janet Yellen's deadline to raise the debt ceiling and avert a default.

"We'd like to see more transparency on how they come to that date," House Majority Leader Rep. Steve Scalise said Tuesday at a news conference.

He added that Yellen's Monday comments signal some "openness to the idea that June 1 may not be the so called X-date."

— Christina Wilkie, Samantha Subin

Advanced Micro Devices could be on track to gain a greater market share of the artificial intelligence accelerator market, according to Bank of America.

"AMD is on the verge of another large opportunity in the $80bn AI accelerator market (by CY27E) where AMD's share is again effectively zero against leader Nvidia," analyst Vivek Arya said.

The firm remains neutral on AMD stock but raised its price target on Monday.

CNBC Pro subscribers can read the full story here.

— Brian Evans

BlackRock CIO of global fixed income Rick Rieder said that he remains confident lawmakers will work out a deal on the debt ceiling.

"I think the markets and myself are putting a very high probability that something gets done. The timing of that is unclear," Rieder said at a media event Tuesday.

The fixed income investor acknowledged that Treasury Secretary Janet Yellen's warning of an early June deadline was earlier than many experts previously expected.

"I think there's a sense of urgency now that you've got to come to a conclusion on this over the next couple of weeks, and presumably get to at least a framework by the end of this week," Rieder added.

— Jesse Pound

Microsoft will keep gaining traction as investors add to artificial intelligence bets, according to Jefferies.

"MSFT has taken pole position in what is likely to be a decade-long industry evolution," Jefferies analyst Brent Thill said. "AMZN won round 1 of Cloud wars. MSFT could be the winner of round 2."

The firm reiterated a buy rating on Microsoft stock on Tuesday.

CNBC Pro subscribers can read the full story here.

— Brian Evans

These are some of the stocks making the biggest moves midday:

• Yelp — Shares of the online reviewing company jumped more than 9% after activist investor TCS Capital Management took a stake in the firm, saying in an open letter that the company should explore strategic alternatives, including a sale.
• AutoZone — The auto retailer's shares fell more than 5% after missing revenue expectations for the fiscal third quarter.
• Lowe's Companies — The home improvement retailer advanced 2.8% on a first-quarter earnings report that beat analyst expectations. But the company cut its full-year outlook.

See the full list of stocks moving here.

— Alex Harring

The Federal Trade Commission's attempt to block the Amgen-Horizon Therapeutics deal will have a chilling effect on large deals, valued at $15 billion or more, in the biopharma space, said Andy Acker, a portfolio manager at Janus Henderson Investors. However, that could accelerate smaller deals, he said, speaking at a virtual conference sponsored by the asset manager.

More than $70 billion in deals have been announced in the biotech and pharmaceuticals industry so far this year — more than in all of 2022, he said. Two of the key forces behind this activity are the need for larger pharmaceutical companies to replace the revenue they are losing due to patent expirations and the difficulty smaller companies are having accessing capital.

Horizon shares are down more than 11% since the start of the year, as concerns about the Amgen deal weigh on its stock price.

— Christina Cheddar Berk

Nvidia will remain the top player in the artificial intelligence space as investments grow, according to Stifel.

"NVDA remains the best-positioned component/ systems company to benefit from the AI investment cycle in the medium term, in our view," Stifel analyst Ruben Roy said.

The firm reiterated a hold rating on Nvidia stock with a renewed price target. Shares of Nvidia slipped 1%.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Shares of Yelp jumped more than 9% after activist investor TCS Capital Management took a stake in the firm, asking in an open letter that the company should explore strategic alternatives, including a sale.

TSC Capital built a bet of more than 4% in Yelp, becoming the company's top five shareholders. TCS said Yelp is "shockingly undervalued" and could be sold to a private equity buyer for at least $70 per share, a more than 120% premium. Another option TSC brought up is to explore a tax-free merger with  internet services company Angi to be a leader in the $500 billion home services market.

— Yun Li

Broadcom rose on Tuesday following a chip production deal with Apple to trade near all-time highs dating back to August 2009, when Avago went public.

Microsoft also rose to trade at its highest level since January 2022, while Advanced Micro Devices hit its highest point since April 2022.

These stocks also notched new 52-week highs:

• Exact Sciences trading at levels not seen since December 2021
• GXO Logistics trading at levels not seen since May 2022
• Dynatrace trading at levels not seen since February 2022
• Palantir Technologies trading at levels not seen since April 2022
• Viasat trading at levels not seen since Aprril 2022
• CCC Intelligent Solutions trading at levels not seen since Aprtil 2022
• Vitesse Energy trading at all-time highs back to its spin-off from Jefferies in January 2023

Here are the name hitting fresh lows:

• Frontier Communications trading at all-time lows back to its exit from bankruptcy in April 2021
• Victoria's Secret & Company trading at all-time lows back to its spin-off from Bath & Body Works in August 2021
• Royalty Pharma trading at all-time lows back to its IPO in June 2020
• WeWork trading at all-time lows back to its SPAC merger in October 2021

— Samantha Subin

Shares of hard-hit regional bank stock PacWest popped more than 19% on Tuesday.

The move built on gains from Monday as the bank shared its plan to sell real estate loans worth about $2.6 billion to a unit of Kennedy-Wilson Holdings.

Other regional banking names also moved higher, including shares of Zions Bancorporation, Comerica and KeyCorp.

Amid the recent banking turmoil that contributed to the collapse of Silicon Valley Bank and Signature Bank, PacWest shares have dropped more than 64% this year and sit about 75% off their 52-week highs.

— Samantha Subin

A deal will be likely reached on the debt ceiling, Sen. Ted Cruz believes.

""I think a deal will be reached, but I worry that the chances of a default are greater than they ever have been," the Republican from Texas said in an interview with CNBC's "Squawk Box."

"I worry that this White House is reckless enough to force a default. I don't think that'll happen. I think that's less likely than not. But the odds are higher than we should be happy with."

— Michelle Fox

Oil prices rose after Saudi oil minister Prince Abdulaziz bin Salman told market speculators on Tuesday they should "watch out," bolstering fears that there could be future challenges in the market.

"Speculators, like in any market, they are there to stay. I keep advising that they will be ouching. They did ouch in April. I don't have to show my cards, I'm not [a] poker player … but I would just tell them, watch out," he said during an energy-focused panel of the Qatar Economic Forum in Doha.

Both Brent and WTI crudes gained more than 1%, or about $1, on Tuesday.

— Alex Harring, Ruxandra Iordache

Energy stocks gained on Tuesday as oil price rose, lifting the S&P 500 sector about 1.5% during morning trading.

Some of the outperformers included Chevron, rising nearly 3% on an upgrade from HSBC. APA Corp, Exxon Mobil, Marathon Oil and Occidental Petroleum rose more than 1% each,

— Samantha Subin

Copper prices hit a low not seen since the year began.

The metal reached $3.622, its lowest since it notched $3.5955 on Nov. 29, 2022.

Copper has dropped 6.8% since the month began. That puts it on track for its worse performance since June 2022, when the metal tumbled 13.6%.

The prices of most metals were down in Tuesday's session on the back of a weak demand outlook for China and rising concerns over the state of U.S. debt ceiling negotiations.

— Alex Harring, Gina Francolla

New home sales rose 4.1% to 683,000 in April, according to data released Tuesday.

That came in above a Dow Jones estimate of 669,000 and the previous month's print. Sales for March were revised to 656,000.

Elsewhere, Richmond Fed manufacturing data for May came in at -15, the lowest reading since February.

— Samantha Subin

The May reading for the Purchasing Managers Index (PMI) came in at 48.5. That was lower than the 50.0 consensus estimate, according to economists polled by Dow Jones.

— Sarah Min

Markets are reacting to recent hawkish talk from Federal Reserve officials, now pricing in only one rate cut this year.

Traders in the fed funds futures market were pricing in just a 23.4% chance of an interest rate increase at the June 13-14 Fed meeting, according to the CME Group.

However, they also now see at most one decrease by the end of the year, assigning a 58.3% probability that the central bank will drop the funds rate to a 4.75%-5% target.

In recent weeks, markets had been pricing in up to three cuts. However, policymakers in recent days have spoken against the likelihood of a loosening of policy, with Minneapolis Fed President Neel Kashkari telling CNBC on Monday that it's possible rates will rise if inflation doesn't slow.

— Jeff Cox

The Dow slid more than 100 points to start Tuesday's session, while the S&P 500 and Nasdaq dipped 0.5% each.

— Fred Imbert

Broadcom shares jumped 3% before the bell on news that its signed a multibillion-dollar deal with Apple to create 5G components in the U.S.

Through the multi-year deal, the companies will design and build the products in across several U.S.-based facilities, including Fort Collins, Colorado.

Apple shares dipped 0.6%. The company said the deal stems from its 2021 plan to invest $430 billion in the U.S. economy.

— Samantha Subin

Yelp shares jumped 11% in Tuesday premarket trading.

The move comes after activist investor TCS Capital Management on Tuesday confirmed reports that it's built a stake of more than 4% in Yelp, and is asking the company to explore strategic alternatives including a sale, according to an open letter to the Yelp board of directors.

"We believe that Yelp is shockingly undervalued and could be sold to either a strategic or private equity buyer for at least $70 per share – or more than a 120% premium to Yelp's current stock price based on reasonable valuation assumptions," read the letter.

Separately, the firm said Yelp should consider a merger with Angi, previously known as Angie's List, to expand into the home services market.

— Sarah Min

A regional nonmanufacturing reading from the Federal Reserve Bank of Philadelphia showed activity improve slightly in May.

The findings from the Philadelphia Fed nonmanufacturing survey showed regional activity improve to -16 in May from -22.8 in April. It marked the third consecutive negative monthly reading of the survey.

— Samantha Subin

Chevron could be a top gainer among oil giants if oil recovers from a 6% loss so far in May, according to HSBC.

Shares gained 1% before the bell as analysts upgraded the stock to a buy from a hold rating. Shares have pulled back 11.4% from the start of the year, which HSBC attributes to lower oil prices. But this could signal a buying opportunity.

"The shares' de-rating has opened up a valuation opportunity, notably compared to Exxon: its consensus-based [price-to-cash flow] multiple has fallen to a more than 3-year low vs its US Supermajor peer," HSBC analyst Kim Fustier said.

CNBC Pro subscribers can read the full story here.

— Brian Evans

Check out the companies making headlines before the bell:

• Yelp — Yelp shares surged 11.4% in premarket trading. Activist investor TCS Capital Management confirmed reports that it's built a stake of more than 4% in Yelp, and is asking the company to explore strategic alternatives including a sale, according to an open letter to the Yelp board of directors on Tuesday.
• AutoZone — Shares of AutoZone fell more than 2% after the specialty retailer's third-quarter revenue came up short of expectations. AutoZone reported $34.12 in earnings per share on $4.09 billion in revenue. Analysts surveyed by Refinitiv were looking for $31.51 in earnings per share and $4.12 billion in revenue. AutoZone's inventory increased 7.4% year over year.
• Lowe's Companies — Shares dipped about 1% after the home improvement retailer lowered its full-year forecast for total sales, comparable sales and adjusted earnings per share. However, Lowe's beat on first quarter earnings and revenue.

Read the full list here.

— Sarah Min

Lordstown Motors' stock slid nearly 11% before the bell after the electric vehicle company announced a reverse 1-for-15 stock split.

The split, effective May 24, is aimed at appeasing the Nasdaq's $1 minimum bid price requirement, the company said in a statement Tuesday.

"The Reverse Stock Split is intended to improve the marketability and liquidity of the Class A common stock," Lordstown said. "A higher market price can make the Class A common stock more attractive to a broader range of institutional investors, professional investors, and other members of the investing public."

Shares have tumbled nearly 74% so far this year.

— Samantha Subin

Shares of Dick's Sporting Goods rose more than 3% before the bell after beating earnings expectations for the recent quarter and reiterating its 2023 outlook.

The sports retailer reported earnings of $3.40 a share on $2.84 billion in revenue. Analysts surveyed by Refinitiv had anticipated earnings of $3.18 a share on $2.80 billion in revenue.

The company reaffirmed its 2023 guidance and same-store sale expectations. Comparable store sales rose 3.4% due to more transactions and higher prices, the company said.

— Samantha Subin

Lowe's shares dipped about 1% in the premarket after the home improvement retailer lowered its fill-year sales forecast. The company now expects revenue between $87 billion and $89 billion. That's down from a range of $88 billion to $90 billion.

— Fred Imbert, Melissa Repko

European stocks were lower in early Tuesday trade, with the Stoxx 600 index falling 0.34% after a directionless Monday.

Germany's DAX fell further still from the record high it hit Friday, down 0.13% on the previous session. France's CAC 40 dropped 0.4%, while the U.K.'s FTSE 100 was down 0.18%.

Travel saw the biggest fall by sector, down 0.7%.

— Jenni Reid

New Zealand's central bank is expected to raise its benchmark policy rates to 5.5% when it meets Wednesday, according to a Reuters poll of 25 economists.

21 of the economists surveyed expected a hike, while the remainder expected a pause. In the same Reuters poll, the median expected rate hike is 25 basis points.

A rate hike would be the Reserve Bank of New Zealand's 12th since October 2021.

The RBNZ previously surprised investors with a 50 basis points hike to 5.25% in March, when most economists had expected a raise of 25 basis points.

— Lim Hui Jie

Japan's manufacturing sector recorded an expansion for the first time in seven months, according to flash estimates by the au Jibun Bank.

The manufacturing purchasing managers index came in at 50.8 in May, a reversal from the 49.5 recorded in April, "signalling the first improvement in operating conditions since October 2022," the report showed. A PMI reading above 50 indicates expansion, while a reading below that level indicates contraction.

The bank noted there were renewed increases in both output and new orders, with both variables rising at the strongest rate for 13 months. Manufacturers indicated that supply chain issues were showing signs of improvement.

Japan's services PMI was 56.3 in May, higher than the 55.4 seen in April and expanding at the strongest rate since the series began. Composite PMI climbed to 54.9, up from 52.9 in April.

— Lim Hui Jie

Hong Kong's inflation climbed 2.1% in April from a year earlier, slightly above the 2% expected by economists polled by Reuters. April inflation was also higher than the 1.7% recorded in March.

A spokesman for the city's government said that prices of energy-related items continued to increase sharply year-on-year, as well as costs of clothing and footwear.

The price of electricity, gas and water jumped 17.8%, while clothing and footwear prices climbed 6.4%.

The price of takeaway meals and eating out also rose 4.2%, while "price pressures on other major components remained broadly in check," the spokesman said.

Moving forward, Hong Kong expects that domestic price pressures may increase alongside the economic recovery. Overall inflation will likely pick up in the rest of 2023, but will remain "largely moderate".

— Lim Hui Jie

Investors have turned their focus on the debt ceiling as the next potential cue for a market decline as President Joe Biden and House Speaker Kevin McCarthy meet Monday evening.

Financials, energy, materials and industrials were among the worst performing sectors in the S&P 500 in previous debt ceiling-related drawdowns, Lori Calvasina of RBC Capital Markets said on CNBC's "Fast Money" Monday night. She cited the firm's analysis of drawdowns around the debt ceiling dating back to 2011.

Defensive sectors held up the best during these declines, with health care as the worst performing corner of that sector. Tech and growth sectors were "smack dab in the middle," said Calvasina, RBC's head of U.S. equity strategy.

"I do think tech gets hurt, but it probably holds up better than some of those more cyclically oriented areas if we don't get a deal," she added.

— Darla Mercado

President Joe Biden and House Speaker Kevin McCarthy spoke to reporters around when they were scheduled to meet about the debt ceiling.

Biden said he was hopeful about progress and emphasized the need to ensure tax loopholes are closed so wealthy people pay a fair share of taxes. McCarthy said he was looking forward to finding common ground, after saying earlier in the day that decisions have to be made at the meeting.

Investors have been watching for updates on progress out of debt ceiling negotiations amid concerns for what a default could mean for the economy.

— Alex Harring

Treasury Secretary Janet Yellen has just released a new letter to congressional leaders with updated guidance on the earliest date that the U.S. could be at serious risk of a debt default.

The date remains June 1 in the new letter, the same date it's been since the start of May. But the new message contains two key differences from a very similar letter Yellen penned on May 15.

"With an additional week of information now available, I am writing to note that we estimate that it is highly likely that Treasury will no longer be able to satisfy all of the government's obligations if Congress has not acted to raise or suspend the debt limit by earlyJune, and potentially as early as June 1," writes Yellen.

The phrase "highly likely" is new. Last week Yellen wrote that it was merely "likely."

Yellen also removed an entire sentence from last week's letter that said emergency measures Treasury is currently taking could help to push that June deadline out.

"The actual date Treasury exhausts extraordinary measures could be a number of days or weeks later than these estimates," read Yellen's May 15 letter to congressional leaders.

The new letter comes as President Joe Biden is about to meet face to face with House Speaker Kevin McCarthy, part of an increasingly urgent effort to reach a bipartisan compromise deal.

— Christina Wilkie

Stock futures were modestly higher shortly after 6 p.m. ET.

Futures tied to the Dow, S&P 500 and Nasdaq 100 were all up 0.1%.

— Alex Harring