Stocks close lower as government shutdown looms, but log solid gains for September and Q3
By: JeeYeon Park | CNBC.com Stock Market Writer
Stocks finished sharply lower Monday, as
the budget impasse in Washington threatened the first government
shutdown in nearly 17 years, but major indexes still capped a rocky
month and quarter with robust gains.
(Read more: Here comes the DC shutdown: What you need to know)
Stocks took another leg lower in the final half hour of trading after one House Republican member told CNBC that there will be no clean spending bill tonight, marking a government shutdown likely.
Political turmoil in Italy also curbed investor sentiment after Silvio Berlusconi, the leader of the center-right party, ordered a number of his ministers to resign from the cabinet on Saturday, throwing the government into chaos.
(Read more: Here comes the DC shutdown: What you need to know)
Stocks took another leg lower in the final half hour of trading after one House Republican member told CNBC that there will be no clean spending bill tonight, marking a government shutdown likely.
Political turmoil in Italy also curbed investor sentiment after Silvio Berlusconi, the leader of the center-right party, ordered a number of his ministers to resign from the cabinet on Saturday, throwing the government into chaos.
| Name | Price | Change | %Change | ||||
|---|---|---|---|---|---|---|---|
| DJIA | Dow Jones Industrial Average | 15129.67 | -128.57 | -0.84% | |||
| S&P 500 | S&P 500 Index | 1681.55 | -10.20 | -0.60% | |||
| NASDAQ | Nasdaq Composite Index | 3771.48 | -10.12 | -0.27% |
The Dow Jones Industrial Average tumbled nearly 150 points, dragged by P&G and United Techs. The blue-chip index traded lower for the seventh day in eighth. The Dow was down more than 170 points during its session low.
The S&P 500 and the Nasdaq also finished sharply lower. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, jumped above 17.
All key S&P sectors closed in the red, dragged by consumer staples and energy.
Closing Bell Exchange
To break down today's market
movements amid an impending government shutdown, is David Sowerby,
Loomis Sayles and Company; Michael Yoshikami, Destination Wealth
Management; Mike Thompson, S&P Capital IQ; and CNBC's Rick Santelli.
The Senate rejected the House of
Representative's budget bill, making the shutdown of many agencies at
midnight tonight much more likely. The nation faces its first government shutdown in 17 years.
In a 54 to 46 vote, the Senate stripped provisions that would have delayed the implementation of Obamacare by a year, and instead sent an emergency spending bill to the House, where its fate is uncertain.
(Read more: DC 'shenanigans' may cap stock gains: Bob Doll)
U.S. Treasurys ticked higher, driven by a bid for safe haven assets.
President Barack Obama said he's "not at all" resigned to a government shutdown adding he expects to speak to congressional leaders during the day and in ensuing days to address budget and debt impasses.
Last week, major averages logged their first weekly drop since August with investors nervous over a potential shutdown.
"Just as one arguing couple can ruin a large dinner party, the sight of a dysfunctional political process is an unwelcomed development for investor confidence in stocks," wrote Nicholas Colas, chief market strategist at ConvergEx Group. "If and when a government shutdown starts, the clock will start ticking on lower GDP growth rates and reductions in corporate earnings."
Many government employees will be furloughed by the absence of a deal, and if the shutdown takes place the Labor Department will postpone issuing its closely-watched monthly employment report scheduled for Friday.
On the economic front, he pace of business activity in the U.S. Midwest increased to 55.7 in September from 53.0 in August, according to the Institute for Supply Management-Chicago. A reading above 50 indicates expansion in the regional economy.
The Dallas Federal Reserve manufacturing survey will be published at 10:30 am ET. Paychex is the only notable company scheduled to post earnings after the closing bell.
In a 54 to 46 vote, the Senate stripped provisions that would have delayed the implementation of Obamacare by a year, and instead sent an emergency spending bill to the House, where its fate is uncertain.
(Read more: DC 'shenanigans' may cap stock gains: Bob Doll)
U.S. Treasurys ticked higher, driven by a bid for safe haven assets.
President Barack Obama said he's "not at all" resigned to a government shutdown adding he expects to speak to congressional leaders during the day and in ensuing days to address budget and debt impasses.
Last week, major averages logged their first weekly drop since August with investors nervous over a potential shutdown.
"Just as one arguing couple can ruin a large dinner party, the sight of a dysfunctional political process is an unwelcomed development for investor confidence in stocks," wrote Nicholas Colas, chief market strategist at ConvergEx Group. "If and when a government shutdown starts, the clock will start ticking on lower GDP growth rates and reductions in corporate earnings."
Many government employees will be furloughed by the absence of a deal, and if the shutdown takes place the Labor Department will postpone issuing its closely-watched monthly employment report scheduled for Friday.
On the economic front, he pace of business activity in the U.S. Midwest increased to 55.7 in September from 53.0 in August, according to the Institute for Supply Management-Chicago. A reading above 50 indicates expansion in the regional economy.
The Dallas Federal Reserve manufacturing survey will be published at 10:30 am ET. Paychex is the only notable company scheduled to post earnings after the closing bell.
Shutdown, a buying opportunity?
Discussing today's market
action amid a potential government shutdown, and where the best market
opportunities are, with Susan Fulton, FBB Capital Partners, and Peter
Boockvar, The Lindsey Group.
Apple
CEO Tim Cook is expected to meet with billionaire investor Carl Icahn,
presumably to talk about the tech giant's future stock buyback plans.
Separately, Interbrand's annual Global Brands report ranked Apple as the
most valuable for the first time, displacing perennial number one Coca-Cola.
Disappointing economic data from China also sapped investors' appetite for risk. China's final reading of manufacturing activity from HSBC came in at 50.2 in September, lower from a preliminary reading of 51.2 earlier this month. Still, the data was higher from August's 50.1 reading. The Chinese Shanghai Composite outperformed as the region's sole gainer, while Japan's Nikkei index closed down 2 percent.
"This is as good as it gets for the time being. The data reflects the stimulus over the summer but don't expect too sharp an acceleration from here," said Frederic Neumann, co-head of Asian economic research at HSBC.
The pan-European FTSEurofirst 300 was down nearly 1 percent. The Italian blue-chip FTSE MIB index dropped approximately 1.5 percent, suffering its worst session in nearly six weeks.
Disappointing economic data from China also sapped investors' appetite for risk. China's final reading of manufacturing activity from HSBC came in at 50.2 in September, lower from a preliminary reading of 51.2 earlier this month. Still, the data was higher from August's 50.1 reading. The Chinese Shanghai Composite outperformed as the region's sole gainer, while Japan's Nikkei index closed down 2 percent.
"This is as good as it gets for the time being. The data reflects the stimulus over the summer but don't expect too sharp an acceleration from here," said Frederic Neumann, co-head of Asian economic research at HSBC.
The pan-European FTSEurofirst 300 was down nearly 1 percent. The Italian blue-chip FTSE MIB index dropped approximately 1.5 percent, suffering its worst session in nearly six weeks.
@JeeYeonParkCNBC) On Tap This Week:
TUESDAY: PMI mfg index, ISM mfg index, construction spending, auto sales; Earnings from Walgreen, Global Payments
WEDNESDAY: Mortgage applications, ADP employment report, Bernanke speaks, Dell event; Earnings from Monsanto
THURSDAY: Challenger job-cut report, jobless claims, factory orders, ISM non-mfg index, natural gas inventories, Fed's Fisher speaks, Fed Gov Powell speaks, Fed balance sheet/money supply; Earnings from Constellation Brands
FRIDAY: Nonfarm payrolls, Fed's Kocherlakota speaks
What's Trending on CNBC.com:
0 σχόλια:
Δημοσίευση σχολίου
Ο σχολιασμός επιτρέπεται μόνο σε εγγεγραμμένους χρήστες