Debt-ceiling negotiations ran into trouble and spooked markets Friday, though analysts said setbacks should be expected in this process.
“We’ve decided to press pause, because it’s just not productive,” said Republican Rep. Garret Graves of Louisiana, a deputy for House Speaker Kevin McCarthy.
Graves also suggested the Biden White House’s representatives in the talks were being “unreasonable.”
“Until people are willing to have reasonable conversations about how you can actually move forward and do the right thing, then we’re not going to sit here and talk to ourselves,” the congressman told reporters.
When asked if negotiators would be meeting in person over the weekend, Graves said, “I’m not sure right now.”
“We’re not there,” Graves also said, in a remark that indicated a deal wasn’t imminent.
U.S. stocks
DJIA,
sold off after his remarks to reporters, and all three main equity gauges
SPX,
COMP,
closed with modest losses. Traders also were assessing remarks from Federal Reserve chief Jerome Powell as well as a report that Treasury Secretary Janet Yellen had said more bank mergers may be necessary.
“There are real differences between the parties on budget issues and talks will be difficult,” a White House official said. “The president’s team is working hard towards a reasonable bipartisan solution that can pass the House and the Senate.”
Rep. Patrick McHenry, a North Carolina Republican involved in the talks, said there weren’t plans for negotiators to get back together Friday, according to a Wall Street Journal report.
“This is a hard stop,” McHenry said. “We’re at a very bad moment.”
McCarthy told reporters that there needs to be “movement by the White House, and we don’t have any movement yet, so yeah, we’ve got to pause.”
Stocks had advanced Wednesday and Thursday, with credit for the gains going in part to upbeat comments from Biden and McCarthy on the debt-limit standoff. Analysts suggested that markets had turned too optimistic, and Friday’s setback wasn’t a surprise.
“Signs of frustration today displaced the happy talk that occurred throughout most of the week. We find this an unsurprising turn during any constructive negotiation,” said 22V Research’s Kim Wallace and Sandra Namoos in a note.
Terry Haines, founder of Pangea Policy, described Friday’s development as a “predictable bump in the winding negotiation road,” adding that “what it means for markets is that there’s very little hope of a deal by the end of Sunday, and that negotiations will go into next week.”
Now read: Debt-ceiling standoff: Here’s what could go into a bipartisan deal
And see: ‘Doomsday machine’: Here’s what could happen if the debt ceiling is breached
MarketWatch’s Robert Schroeder contributed to this report.