Wall St ends sharply lower on deadlocked debt ceiling talks

talks on Tuesday, as the deadline drew closer to raise the government's $31.4 trillion borrowing limit or risk default.Investors are also waiting for minutes from the Federal Reserve's May 2-3 meeting, due on Wednesday, to assess the central bank's next likely move on interest rates.

Regional Fed Presidents James Bullard and Neel Kashkari on Monday indicated that the U.S. central bank may need to continue hiking rates if inflation remains high. Michael Wilson, Morgan Stanley's equity strategist, said a U.S. debt default is not priced into the market. Even if the two sides agree on a deal, it could still have implications for economic growth, he said.

"If they come to an agreement on the debt ceiling, there will be some concessions on the fiscal spending. It's an issue for growth," Wilson said. "Is that going to be an immediate impact, or will it be later? We think there's a bit of both. At the end of the day, there's no positive tradeoff."

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