Stock market today: Wall Street sinks as stocks tumble worldwide

NEW YORK — Wall Street fell again Wednesday as stocks tumbled worldwide on worries about the economy.

The S&P 500 dropped 0.7% after House Speaker Kevin McCarthy said Republicans and Democrats remain "far apart" in efforts to prevent a potentially disastrous default on the U.S. government's debt. The main U.S. stock index is on track for its worst week in more than two months.

The Dow Jones Industrial Average dropped 255 points, or 0.8%, while the Nasdaq composite lost 0.6%.

Other markets around the world fell even more. Stock indexes tumbled 1.7% in London, 1.9% in Frankfurt and 1.6% in Hong Kong.

Inflation in the United Kingdom remains worse than expected, raising worries that the Bank of England may keep hiking interest rates and squeezing its economy. In Germany, Europe's largest economy, business confidence fell. In China, worries remain about a weaker-than-hoped recovery from COVID-19 restrictions as tensions rise with the U.S. over technology and security.

The U.S. government could run out of cash to pay its bills as soon as June 1 unless Congress allows it to borrow more.

Fear has so far been concentrated in the bond market, where prices dropped for Treasury bills due to pay out around the date of a possible default. Price drops for bonds raise their yields.

The yield on the 10-year Treasury rose to 3.73% from 3.70% late Tuesday. The yield on the two-year Treasury rose to 4.37% from 4.33%.

Still, a measure of fear among stock investors on Wall Street climbed 8% and is near its highest level since March. That's when worries flared about the banking system under the weight of much higher interest rates.

Federal Reserve yanked interest rates up at the fastest pace in decades in hopes of getting high inflation under control. High rates hurt prices for stocks, bonds and other investments. That has many investors bracing for a recession.

Federal Reserve officials were divided earlier this month on whether to pause their rate hikes at their upcoming meeting in June, according to the minutes of their latest meeting.

Companies that reported stronger-than-expected results for the start of the year helped limit Wall Street's losses Wednesday.

Kohl's jumped 7.5% after reporting a surprise profit for its latest quarter, helped in part by momentum at its Sephora beauty shops. Analysts expected it to turn in a loss.

Homebuilder Toll Brothers rose 2.1% after reporting much better results than analysts expected for the latest quarter.

All told, the S&P 500 fell 30.34 to 4,115.24. The Dow dropped 255.59 to 32,799.92, and the Nasdaq lost 76.08 to 12,484.16.