Traders reduced their bets on a June Federal Reserve rate hike to 25% after Jerome Powell signaled a pause. Stocks fell amid a drop in bank stocks and concerns that US lawmakers are unable to reach an agreement to avoid a default.
The S&P 500 halted a two-day rally after failing to stay above the closely watched 4,200 level, as a Republican representative said bipartisan talks in Washington are on "pause." When reporters asked about new debt-ceiling meetings, House Speaker Kevin McCarthy did not respond.
The $3.2 billion SPDR S&P Regional Banking exchange-traded fund fell nearly 2% following news that Treasury Secretary Janet Yellen told the heads of large lenders that more mergers may be required.
