Speaker Kevin McCarthy left the US Capitol late Tuesday afternoon saying the two sides had yet to reach a deal to avert a first-ever US default, and a top lieutenant said there are no more meetings planned.

Republican Representative Garret Graves, one of McCarthy’s chief negotiators, suggested just hours after a two-hour meeting in the Capitol that the two sides were at an impasse.

“Bottom line is that we’re going to have to see some movement or some fundamental change in what they’re doing,” Graves said of the White House negotiating team. “Right now, we don’t have additional meetings set up.”

Another McCarthy lieutenant, Representative Patrick McHenry, said it’s unclear what happens next.

The S&P 500 index of US stocks closed 1.1% lower Tuesday. The 2-year Treasury yield ended little changed at 4.32%, after rising as high as 4.41%. The dollar rose 0.2% against a basket of major currencies.

Graves acknowledged that there has been “substantial progress” and the two sides are “very close” in some areas. But fundamental disagreements remain on spending and work requirements as the calendar veers closer to June 1, the date by which Treasury Secretary Janet Yellen has said the US could run out of cash to pay its bills.

Graves said House Republican negotiators are “open” to additional meetings. “We’re not going anywhere,” he said.

The House Republican team and leadership will continue to meet among themselves, he added.

The current standoff over the debt ceiling has the potential to put more strain on the US economy, which is already vulnerable to a recession after a series of interest-rate increases by the Federal Reserve, according to Bloomberg Economics.

But some conservative House members said Tuesday they even doubt the drama is necessary, with Representative Chip Roy of Texas even calling it a “manufactured crisis” to force Republicans into stepping back from some demands.

Republicans Question If X-Date Is as Close as Yellen Says

Republicans want to slash domestic spending over as many years as possible, while Democrats have offered slimmer cuts over a couple of years. Democrats also want to include defense spending limits in any agreement.

That sets up a key tension for hawkish Republicans, who want to increase the Pentagon budget at the expense of deeper cutbacks in social spending. McCarthy said defense cuts shouldn’t be on the table.

The California Republican said he would not waive a rule that allows House lawmakers 72 hours to review legislation before a vote. Conservatives have demanded the time but it adds to the pressure to get an agreement.

--With assistance from Matthew Boesler.

(Updates with details on the talks. A previous version corrected the date in the first paragraph)

Author: Ari Natter, Billy House and Erik Wasson