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The Dow Jones Industrial Average closed down 0.77% or 255 points, the Nasdaq was down 0.6%, and the S&P 500 was down 0.73%.
House Speaker Kevin McCarthy said he and President Joe Biden remained “far apart” on a number of issues to break the impasse on reaching an agreement to raise the debt ceiling.
McCarthy added, however, that he was hopeful of making progress on talks with Biden during a meeting on Wednesday.
The impasse on a debt ceiling agreement brings the U.S. within days of its first default since 1979.
Treasury Secretary Janet Yellen has previously warned the U.S. could run out of money by June 1.
Worries about a default weighed on investor sentiment and overshadowed further signs that the Fed could pause rate hikes in June.
In discussing the policy outlook, participants generally agreed that in light of the lagged effects of cumulative tightening in monetary policy and the potential effects on the economy of a further tightening in credit conditions, the extent to which additional increases in the target range may be appropriate after this meeting had become less certain, the Fed minutes showed on Wednesday.
Industrials and financials were the biggest drag on the broader market with the latter coming under pressure from renewed selling in regional banks.
Lincoln National Corporation (NYSE:LNC), Citigroup Inc (NYSE:C), and Citizens Financial Group Inc (NYSE:CFG) were the worst performing financial stocks.
Energy, however, bucked the trend lower for the second straight day as oil prices continued to be supported by expectations of an OPEC+ production cut.
