GDP reading, Costco earnings, Workday: 3 things to watch

Investing.com -- Stocks were falling on Wednesday as debt ceiling negotiations stalled over disagreements on spending levels, with a deadline fast approaching to avert a U.S. default.

Lawmakers are racing to complete a deal before that deadline, which some estimates put as early as June 1, when the government runs out of options to continue paying its obligations. Economists and administration officials have warned that a possible default could cause chaos in financial markets, and the sell-off in stocks, with a rising volatility index, is indication that unease is setting in.

At the same time, the minutes of the Federal Reserve's latest policy meeting showed officials are divided on where interest rates should head next, with some seeing the need for more increases to fight inflation and others considering a pause in hikes as the economy shows signs of a slowdown. The Fed has raised interest rates 10 times since last year, taking the benchmark rate from near zero to over 5%.

The Fed next meets in June. Futures markets are betting on a pause, especially in light of the banking turmoil that has reined in lending. That also has a cooling effect on the economy.

What happens after June is still uncertain. The Fed could resume rate increases, something suggested by Fed officials in recent days. Fed Gov. Christopher Waller said more rate increases might be needed this year to move inflation solidly back in the direction of its 2% target.

Here are three things that could affect markets tomorrow:

1. GDP reading

Another reading of gross domestic product for the first quarter is due out at 8:30 ET (12:30 GMT). Analysts expect the economy to expand 1.1% from the prior quarter.

2. Costco earnings

Among retailers, warehouse club Costco Wholesale Corp (NASDAQ:COST) is expected to report earnings per share of $3.30 on revenue of $54.6 billion. Dollar Tree Inc (NASDAQ:DLTR) is expected to report earnings per share of $1.52 on revenue of $7.28B. Gap Inc (NYSE:GPS) is expected to report a loss per share of 15 cents on revenue of $3.29B.

3. Workday reports

Workday Inc (NASDAQ:WDAY), the maker of financial and human resources software, is expected to report earnings per share of $1.12 on revenue of $1.67B.