US stocks drop as Biden's recession warning adds to cautious outlook ahead of Fed meeting
- US stocks slumped Friday to finish lower for the week.
- The White House warned the budget clash in Washington risks triggering a recession.
- The Federal Reserve is gearing up to meet next week.
US stocks closed lower Friday, cementing losses for the week after the White House said the economy is at risk of falling back into recession if lawmakers let the country hit the debt ceiling, with the warning coming before the Federal Reserve next week is likely to signal it's pulling back on stimulus measures.
Stocks also came under pressure as quadruple witching took place, with the event centered on the simultaneous expiration of equity options, index options, equity single stock futures and equity index futures. The S&P 500 logged its eighth loss in 10 sessions.
Here's where US indexes stood at 4:00 p.m. on Friday:
- S&P 500: 4,432.72, down 0.92%
- Dow Jones Industrial Average: 34,582.90, down 0.48% (168.42 points)
- Nasdaq Composite: 15,043.97, down 0.91%
Stocks slumped as the Biden administration told state and local governments in a letter there's a risk of a default on US debt if lawmakers do not resolve their budget conflict and Congress fails to raise or suspend the federal borrowing ceiling. A default could spark a recession, the White House said.
The warning came before the Federal Reserve meets next week, with investors expecting the central bank to point to its path toward tapering asset purchases.
Around the markets, gold slipped to $1,752.21 per ounce. The yield on the US 10-year Treasury note rose to 1.38%.
Oil prices fell, with West Texas Intermediate crude down 0.8% to $72.01 per barrel. Brent crude, oil's international benchmark, fell 0.5% to $76.36 per barrel.