Wall Street indices mixed ahead of a new round of debt talks

May 22 (Reuters) – The Dow Jones plunges and the Nasdaq strengthens on Monday ahead of talks on raising the US debt ceiling. Meanwhile, the Chinese government’s ban on Micron chips sent the company’s shares down.

US President Joe Biden and Republican Chairman Kevin McCarthy will meet on Monday to discuss the debt ceiling. The new talks come less than two weeks ahead of a deadline after which the Treasury warned that the federal government would struggle to pay its debts.

A default could cause chaos in the financial markets and a spike in interest rates.

“Everyone is watching this Kevin McCarthy-Joe Biden meeting, waiting for some sign of breaking the debt ceiling,” said Dakota Wealth’s Robert Pavlik. “People are just waiting and watching to see how this all unfolds.”

China’s cyber regulator has banned Chinese key infrastructure operators from buying Micron chips. The shares of the largest US producer of memory chips fell by 4%.

Apple Inc lost 0.76% after Loop Capital downgraded the iPhone maker’s share rating from Buy to Hold. This is the first cut for Apple in five months, according to Refinitiv data.

At 5:50 p.m. Moscow time, the Dow Jones index fell 0.38% to 33,297.94 points, the S&P 500 index was at 4,191.27 points and the Nasdaq index was up 0.36% to 12,703.17 points.

Chevron Corp shares fell 1.37% after the oil giant said Monday it would buy PDC Energy Inc in a $7.6 billion debt-adjusted deal.

PacWest Bancorp jumped 8.81% after the regional lender agreed to sell a portfolio of 74 real estate loans to subsidiary Kennedy-Wilson Holdings Inc.

Investors will look for clues about the future monetary policy stance in statements from US Federal Reserve officials and this week’s key figures such as the April Personal Consumption Expenditure (PCE) Index and Durable Goods.

Minneapolis Federal Reserve Bank Governor Neil Kashkari said on Monday whether he would vote to raise interest rates or hold the regulator’s June meeting was an open question.

Louis, Fed Chairman James Bullard said the Federal Reserve may have to raise its benchmark interest rate by another half a percentage point this year.

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(Shreyashi Sanyal and Shristi Achar A in Bangalore)