Why are stocks falling today?

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Major stock indexes fell on May 31 as investors await the fate of a debt ceiling agreement President Joe Biden and House Speaker Kevin McCarthy agreed.

It’s an hour before the start of trading Dow Jones, Nasdaq and S&P 500 all were down about 0.4%.

Investors are also concerned about China’s economy after the Hong Kong stock market slump bear market area. The Chinese yuan is trading at 7.11 to the dollar, its lowest level this year.

Stocks on Worry Street are falling

While the deal on the debt ceiling is expected to be passed in Parliament today, dismay among Conservative members has grown in recent days, creating uncertainty. If the deal is not passed, there are concerns that the US could default on its debts for the first time.

China news maybe more worrying. Economic recovery has stalled despite the end of quarantines and commodity prices they are falling.

There are also concerns over the growing cold war between the Chinese government, which insists it will take back Taiwan by force, and the United States, which has pledged support for the island. Visits to Shanghai the author Tesla (NASDAQ:TSLA) CEO Elon Musk and JPMorgan Chase (NYSE:JPM) CEO Jaime Dimon failed to dispel the gloom in the Chinese market.

Even artificial intelligence (AI) boom that brought huge profits to the biggest technology stocksit can tip over. Nvidia (NASDAQ:NVDA) was down 1.5% overnight and Meta platforms (NASDAQ:META) also fell. Smaller AI names like C3.AI (NYSE:AI) and Palantir Technologies (NASDAQ:PLTR) fell harder.

However, assuming the debt deal goes through, morning stock buyers would benefit. China’s woes should also mean lower inflation, and if the Federal Reserve can reverse its rate hikes later this year, the happy days will be here again.

What happens next?

Expect slow trading until the House makes its decision. That’s when we’ll know if the bulls or bears were offside, and there will be attention a return to inflation.

Dana Blankenhorn held a long position in NVDA at the time of publication. The opinions expressed in this article are those of the writer and are the subject of InvestorPlace.com Publishing Guidelines.

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