US stocks were lower Wednesday morning, as investors kept a watchful eye on the prospects for the debt-limit deal in an expected House floor vote later. Meanwhile, China’s economic woes pressured global markets.

The S&P 500 (^GSPC) dropped 0.52% while the Dow Jones Industrial Average (^DJI) dipped 0.69% or more than 200 points. The technology-heavy Nasdaq Composite (^IXIC) slipped 0.13% at 10:06 am ET.

US bond yields weakened as investors fretted over the potential impact of the debt-limit deal and braced for the release of fresh jobs data. The yield on the benchmark 10-year Treasury dropped to 3.68%. The two-year note yield slipped to 4.4%, while that on the 30-year bond dropped to 3.9%.

The debt-ceiling agreement negotiated by President Joe Biden and House Speaker Kevin McCarthy passed its first key test on Tuesday, when it gained approval from the Republican-led House Rules Committee despite opposition from hard-liners. That cleared the way for the deal to go before the House on Wednesday.

The clock is ticking down, as Congress must race to pass the deal to avoid a catastrophic default by June 5. That so-called X Date is when the US will run out of money to pay its bills, Treasury Secretary Janet Yellen has warned.

Hawkish comments from Federal Reserve officials posed a headwind for Wall Street. Federal Reserve Bank of Richmond President Thomas Barkin said Tuesday he’s looking for signs that demand is cooling to be convinced that inflation will ease, speaking at a National Association for Business Economics event.

Meanwhile, Federal Reserve Bank of Cleveland President Loretta Mester, president of the Federal Reserve Bank of Cleveland, said she sees no “compelling reason” to pause interest-rate increases amid the debt-limit deal, speaking in a Financial Times interview published Wednesday.

Fed officials Patrick Harker, Susan Collins and Michelle Bowman are expected to speak publicly later Wednesday.

In light of recent economic data, markets are pricing in an increase of 25 basis points in interest rates from the Fed at policymakers’ meeting on June 13-14.

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Elsewhere, China’s factory activity slumped to its weakest level for a second straight month, another sign its post-pandemic economic recovery is losing steam. Asian markets tumbled after the release of the data.

Wednesday’s economic docket brought the latest on the number of job openings. Data from the US Bureau of Labor Statistics reported that the number of open jobs in the US edged up to 10.1 million. Economists polled by Bloomberg had expected 9.4 million openings.

On the housing front, mortgage demand dropped to its lowest level since March, while refinancing activity also dampened to another low, the MBA data showed Wednesday.

In US equities, the run-up in stocks linked to AI was losing momentum, after the buzz around the technology helped boosted the Nasdaq 100 Index (^NDX) on Tuesday. Shares of ChargePoint Holdings, Inc. (CHPT) slipped, while C3.ai, Inc. (AI) dipped more than 6% Wednesday.

In single-stock moves, SoFi Technologies, Inc. (SOFI) shares rallied more than 4% in the wake of the debt ceiling deal. The bill would reinstate government student loan repayments, benefiting the online personal finance company.

Shares of HP Inc. (HPQ) sank more than 5% after the computing giant posted better-than-expected quarterly earnings on Tuesday, but reported sales that fell more than analysts estimated.

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Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv

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