Wall Street closes lower as debt ceiling talks remain inconclusive

Wall Street broadly finished lower on Wednesday as the U.S. debt ceiling talks in the Capitol remained inconclusive.

The Dow Jones Industrial Average closed at 32,799.92, falling by 255.59 points or 0.77 percent. The S&P 500 declined by 30.34 points or 0.73 percent to conclude the session at 4,115.24. Meanwhile, the tech-heavy Nasdaq Composite index ended the day at 12,484.16, losing 76.08 points or 0.61 percent. All three indexes also closed lower on Tuesday.

All sectors within the S&P 500 except one declined during the session, with real estate leading the loss. The only exception — the energy sector — extended its gaining streak after Saudi Arabia projected further cuts in oil production, increasing uncertainty about the global oil supply.

The CBOE Volatility Index, which measures the 30-day expected volatility of Wall Street, rose by 8.09 percent to hover around the three-week high of 20.03.

Shares of Citigroup fell by 3.09 percent to $44.49 after the large lender canceled the $7 billion sale of Banamex, its Mexican business, and opted to pursue an initial public offering.

Agilent Technologies declined by 5.95 percent to $120.99 after the Santa Clara-based electronics company slashed its annual sales and profit projections. TurboTax-owner Intuit also posted a 7.53 percent loss after cutting its profit forecast.

Negotiators of the White House and Republicans continued their talks regarding the debt limit on Wednesday. Edward Jones senior investment strategist Angelo Kourkafas said the prolonged discussions influenced the decline in the equity market.

"Up until yesterday, investors have been very optimistic around the U.S. debt ceiling resolution. But now as we get closer ... to the June 1 X-date, we are seeing some caution again."

Angelo Kourkafas, Edward Jones senior investment strategist

U.S. House Speaker Rep. Kevin McCarthy said both parties had "made some progress working down there," predicting they would reach a deal soon. White House spokesperson Karine Jean-Pierre shared a similar sentiment, saying both sides could reach an agreement if the discussion continued "in good faith."

Sources, however, said there are some unresolved issues in the negotiations. The White House and congressional Democrats said Republicans use the debt ceiling crisis to advance an agenda they could otherwise not pursue.

The Treasury Department previously warned that the government could default on its dues as soon as June 1, less than a week away. Analysts have also pointed out that it will take several days to pass the legislation through Congress after reaching an agreement. Many compared the situation to the debt ceiling crisis in 2011, in which the U.S. only raised the debt limit 72 hours before the X-date.

The crisis has been going on for months, with Republicans demanding the White House to cut federal expenditures and limit future spending. The White House argues that spending cuts will affect federal programs and proposes new tax mechanisms to increase revenues instead.

Analysts say Congress can inadvertently create a widespread market crisis by failing to act in time. Federal Reserve Chairman Jerome Powell also previously urged lawmakers to conclude the debt ceiling debate but acknowledged that the issue was not a part of the central bank's mandate.

Fed's meeting minutes

The U.S. equity market held briefly before continuing its descent following the publication of the Fed's minutes from its May policy meeting. According to the minutes, Fed officials "generally agreed" that the need to further hike the country's benchmark interest rate "had become less certain." Fed fund futures predict that the central bank will pause rate hikes in its policy meeting next month.

Fed Governor Christopher Waller said the central bank could skip a rate hike in June but indicated that it would not be the end of the Fed's hiking campaign. He reasoned that the "lack of progress" on inflation did not warrant an ending to the Fed's tightening cycle.