After a positive start to the session, the stock market turned to the red Friday when House Speaker Kevin McCarthy's representatives stormed out of a private meeting with White House officials, calling the other side "unreasonable" and putting talks over the debt ceiling in jeopardy. 

Risk off struck all major indices and virtually all sectors, with a few noteworthy exceptions, such as energy, which was powered by the resilience of oil and natural gas prices. Fed Chair Jerome Powell and former Fed Chair Ben Bernanke delivered monetary policy remarks earlier in the day. 

CME Group Fedwatch tool reports that traders' expectations for a rate hike in June dropped from as high as 42% probability earlier in the day to 15%.

Cues From Friday's Trading:

All major averages traded were weaker for the session, with the Nasdaq 100 index dropping nearly 0.5%, the Dow Jones down 0.4% and the S&P 500 down 0.4%. 

Small caps were the weakest link, with the Russell 2000 index falling 1%. 

Analyst Color: 

"We don't advise chasing the bubble in 2023," he said said, noting that more than 200 basis points of Fed rate cuts are already priced in until the 2024 elections. 

Almost all U.S. equity sectors were negative, except for the Energy Select Sector SPDR Fund (NYSE:XLK) and the Health Care Select Sector SPDR Fund (NYSE:XLV), which traded up by 1% and 0.5%, respectively. 

The weakest performer was the Discretionary Select Sector SPDR Fund (NYSE:XLY), down 1%, and the Communication Services Select Sector SPDR Fund (NYSE:XLC), which was down 0.5%. 

See also: Best Futures Trading Software

Stocks In Focus:

Foot Locker, Inc. (NYSE:FL) dropped 26% after reporting weaker-than-expected financial results last quarter. 

Aemetis, Inc. (NASDAQ:AMTX) rose 38%, after rising 17% Thursday, when the company announced approval by the U.S. Environmental Protection Agency of a subsidiary's renewable natural gas production facility.

V.F. Corporation (NYSE:VFC) was the S&P 500's worst performer, down 8.4%. The company is will announce its quarterly financial results on Tuesday. 

Airbnb, Inc. (NASDAQ:ABNB) fell nearly 4%, the worst performer among Nasdaq 100's components. 

Crude oil edged marginally down by 0.4% to $71.78 a barrel. 

The United States Oil Fund ETF (NYSE:USO) was 0.3% lower to $63.87 per share.  

Treasury yields slightly rose, with the 10-year yield up by 2 basis points to 3.67% and the two-year yield flat at 4.25%. The iShares 20+ Year Treasury Bond ETF (NYSE:TLT) was 0.4% lower for the day. 

The dollar weakened, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE:UUP), down 0.4%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust (NYSE:FXE), was 0.5% lower to 1.0818.

European equity indices closed the session in the green, with the German Dax index approaching record highs. The iShares MSCI Eurozone ETF (NYSE:EZU) rose 0.8%. 

Staff writer Piero Cingari updated this report midday Thursday. 

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