U.S. stocks closed lower Tuesday as investors watched for developments from a meeting between President Biden and House Speaker Kevin McCarthy over the debt ceiling and awaited key inflation data.

The S&P 500 (^GSPC) slipped 0.64%, while the Dow Jones Industrial Average (^DJI) dipped 0.74% or more than 50 points. The technology-heavy Nasdaq Composite (^IXIC) fell 0.63%.

Meanwhile, PacWest Bancorp (PACW) shares gained more than 2%, reversing losses from earlier in the session as regional banking volatility continues. On the commodities front, oil prices rose to $73.54 a barrel.

The clock is ticking for a divided U.S. Congress to raise the federal government's debt ceiling, which currently stands at over $31 trillion but risks running out of cash as soon as June 1. Razor-thin margins in Congress are complicating the matter. President Joe Biden was expected to meet with congressional leaders on Tuesday.

As the U.S. gets closer to the brink of a default, nearly half of US banks are tightening their lending standards. If companies struggle to access loans, they might cut back on investment, slowing economic growth. Tighter credit conditions may "act as a de-facto Fed hike," as JPMorgan analysts wrote Tuesday.

Wall Street is also looking ahead to Wednesday's April inflation report for clues on whether the Federal Reserve will continue to hike interest rates at its June meeting. Headline inflation is forecast to increase 5% from a year ago. On a "core" basis, which strips out the more volatile costs of food and gas, prices in April are expected to have risen 0.4% over the prior month and 5.5% over last year, according to Bloomberg data.

New York Federal Reserve President John Williams cautioned on Tuesday that inflation "remains too high” due to a strong job market.

Separately, economic data showed that confidence among small-business owners fell in April to the lowest level since 2013, signaling a pullback in business investment.

Treasury yields were higher. The yield on the 10-year note traded up to 3.53%, while the two-year note yield gained to 4.03%.The dollar index gained, while gold edged upward.

On the earnings front, Wall Street anticipates results from Airbnb, Inc. (ABNB), Rivian Automotive, Inc. (RIVN), and Warren Buffett’s favorite Occidental Petroleum (OXY), which are all set to report later today after the bell.

In single-stock moves, shares of Palantir Technologies Inc. (PLTR) jumped over 23% Tuesday after its first-quarter results topped expectations. The company said it expects to be profitable through the end of the year.

PayPal Holdings, Inc. (PYPL) shares sank more than 12% on Tuesday after the company cut its outlook for annual adjusted operating margin.

Boeing Company (BA) shares rose after the news of airplane orders and deliveries. Shares of Novavax Inc.(NVAX) rallied 27% after the vaccine maker announced restructuring plans that include cutting about 25% of its global workforce.

Shares of Lucid Group, Inc. (LCID) fell after the EV maker reported lower-than-expected first-quarter revenue on Monday and trimmed its 2023 production forecasts.

Tyson Foods, Inc. (TSN) shares fell following the 16% slump on Monday when the company cut its sales forecast on declining demand for pork and beef and said its costs are rising.

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

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