The indices that had started in the green lost 0.33% for the Dow Jones to 33,426.63 points, 0.24% for the Nasdaq (12,657.90 points) and 0.15% for the S&P 500 (4,191.98 points).

The leader of the Republicans in the House of Representatives Kevin McCarthy dampened the optimism that reigned the day before on the negotiations saying at the end of the morning that they should be put "on pause".

Moments earlier, the White House acknowledged that it had "real differences" with the Republican opposition and indicated that the discussions were "difficult".

The stakes are high since time is running out to allow the United States to borrow again before June 1, otherwise the country could default on its debt, a catastrophic eventuality for global financial markets.

Immediately after this news, stocks reversed their course, bond yields slowed their rise and above all, gold, a safe haven par excellence, jumped from $ 19 to $ 1,978.90 an ounce.

"The disappointment over the debt negotiations is certainly" at the root of the depressed stocks, said Jack Ablin of Cresset Capital.

"What you have to look at is gold, it's a very good barometer of the debt ceiling debate," he added.

Gold, the big beneficiary

The analyst recalled that in 2011 when the United States came close to default to the point of seeing the debt rating of the world's largest borrower downgraded by a rating agency, gold was "a big beneficiary" of the panic on the markets.

"It's the safe haven," because in the event of a threat of default "the dollar will fall, bond yields will fall and stocks will fall," he warned.

In the bond market, yields on two-year Treasuries lost some of their going to 4.29% against 4.33% in the first part of the session and 4.25% the day before.

Added to this pessimism about the talks between the administration and the White House were reactions to comments by US Treasury Secretary Janet Yellen on the banking sector that cooled investors.

The latter said Thursday before a meeting of CEOs of major banks that other bank mergers may be "necessary", according to reports in the press published Friday.

After the regional bank crisis that saw several institutions close or bought out in disaster, these comments "suggested that the situation may be worse than we think," said Jack Ablin.

The shares of the regional banks, although up at the beginning of the session, dipped as PacWest (-1.88%), Western Alliance (-2.44%) and Zions (-1.73%).

As for Jerome Powell, the head of the Fed, who was speaking during a conference on monetary policy, he assured that "no decision" had been made on interest rates for the next meeting in June.

For Edward Moya of Oanda, the Fed chairman has "paved the way for a pause" in rate hikes. But for Pat O'Hare of Briefing, these statements were "tasteless".

At the quotation, Disney fell 2.57% to $ 91.35 after announcing that it was abandoning the construction of a campus for its employees of nearly a billion dollars in Florida while the entertainment group is in full quarrel with the governor of the state, Ron DeSantis.

Morgan Stanley fell 2.66 percent after CEO James Gorman, 64, announced Friday that he planned to resign later this year, launching a race to succeed him.

Sports shoe retailer Foot Locker slumped 27.24% as first-quarter results were disappointing and the retailer lowered its full-year earnings forecast.

© 2023 AFP