Stocks falter as worries about U.S. gridlock grow
By CNNMoney Staff @CNNMoneyInvest October 2, 2013: 4:57 AM ET
NEW YORK (CNNMoney)
Day two of the U.S. government shutdown could see stock markets falling as investors worry that political stalemate will hurt growth and risk the country being unable to pay all its bills later this month.
U.S. stock futures were weaker across the board, with S& P 500 futures down nearly 0.8%.
With Congress unable to agree on a deal to
fund the government past Monday, more than 800,000 federal workers are being furloughed without pay this week. In addition, government agencies are curtailing their services and federal museums, parks and monuments are closed to the public.
And Treasury Secretary
Jack Lew said Tuesday that the government has started to use the last of its " extraordinary measures" to ensure it stays below debt ceiling. If the ceiling isn't raised, the risk of a U.S. default will rise.
At 8:15 a.m. ET, payroll processor ADP will release its monthly report on private-sector jobs. In corporate news, agriculture technology firm
Monsanto (MON, Fortune 500) is set to release quarterly results before the opening bell.
Related: Fear & Greed Index
U.S. stocks finished higher Tuesday, initially shrugging off the government shutdown on hopes that it may be short-lived.
European markets were weaker in morning trading, weighed down by worries about the U.S.
The European Central Bank will announce its latest decision on interest rates at 7.45 a.m. ET, with ECB President Mario Draghi speaking around 8.30. The bank is expected to make no change to policy.
Asian markets ended mixed. Hong Kong's Hang Seng, which was closed Tuesday, gained 0.5% in response to Wall Street's rally.
Japan's Nikkei opened flat but lost momentum through the day, eventually closing 2.2% lower as investors considered the
tax hike and stimulus plan announced Tuesday by Prime Minister Shinzo Abe. The tax hike should slow growth, and it remains unclear whether the 5 trillion yen stimulus will be enough to offset the hit to Japan's economy.
The Shanghai Stock Exchange was closed for the National Day celebration
Have warn correction coming. Short now!
Shut down humour..it appears that the shutdown stretches as far as the White House.
Huat arh!
Long Dow again..... So shiok...
HSI above 23K.When STI gonna be above 3200 again...
Peter_Pan ( Date: 02-Oct-2013 11:04) Posted:
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Wayang only....acting like kids.....lol.
tanglinboy ( Date: 02-Oct-2013 07:14) Posted:
| Strange that a government can shut down like this
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Remember to set trailing to protect profit....
eurekaw ( Date: 01-Oct-2013 23:47) Posted:
Sifu, i also longed Dow ard 11pm. Huat huat la!
Isolator ( Date: 01-Oct-2013 23:23) Posted:
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Singapore may shutdown soon.... LOL
Down, Nasdaq & S&P all hve moderate gain. Hope SIT 2day see more UP side! 😊
By Alex Barinka & Aubrey Pringle - Oct 2, 2013 4:42 AM GMT+0800
U.S. stocks rose, after the Standard & Poor?s 500 Index fell to a three-week low yesterday, as investors speculated that the economic effects of the first partial government shutdown in 17 years would be limited.
The S& P 500 rose 0.8 percent to 1,695 at 4 p.m. in New York, after falling yesterday for the seventh time in the past eight sessions. The Dow Jones Industrial Average added 62 points, or 0.4 percent, to 15,191.70. About 6.3 billion shares changed hands on U.S. exchanges, or 9.3 percent more than the the three-month average.
?We have gone through this before, it?s not too surprising that investors aren?t frightened by it,?Bruce Bittles, chief investment strategist at RW Baird & Co., said by phone from Sarasota, Florida. His firm oversees $100 billion. ?The selling pressure lifted, and that has encouraged a lot of buyers here looking into buying the dip.?
The benchmark equity gauge slid 0.6 percent yesterday, bringing its retreat from a Sept. 18 record to 2.6 percent, as lawmakers in Washington failed to agree on a federal budget.
The resulting shutdown will put as many as 800,000 federal employees out of work temporarily and cost the U.S. at least $300 million a day in lost output at first, according to IHS Inc. That compares with the country?s $15.7 trillion economy.
The standoff may be a buying opportunity for stock investors, if history is any guide. The S& P 500 has risen 11 percent on average in the 12 months following past government shutdowns, according to data compiled by Bloomberg on instances since 1976. That compares with an average return of 9 percent over 12 months.
Borrowing Limit
Congress also faces a dispute over raising the $16.7 trillion debt ceiling this month. The Treasury has said measures to avoid exceeding the borrowing limit will be exhausted on Oct. 17. The U.S. won?t have enough money to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office. Failure to increase the limit could lead to a downgrade of the government?s credit rating.
?The bigger concern that the market has had over the past few days of trading has been the debt ceiling deadline,? Wasif Latif, the San Antonio-based vice president of equity investments at USAA Investments, said by telephone. His firm oversees $57 billion. ?The Fed is seen as a support or provider of the liquidity of the market. If this gets prolonged or there is a bigger issue, there is the outlook that the Fed may come in and do more or provide that support.?
The S& P 500 added 3 percent last month as the Federal Reserve unexpectedly refrained from reducing its $85 billion in monthly asset purchases. The gauge gained 4.7 percent in the third quarter. Three rounds of central-bank stimulus and better-than-forecast corporate earnings have pushed the S& P 500 up as much as 155 percent from a March 2009 low.
Data Delay
Investors have been scrutinizing economic reports to gauge whether growth is robust enough for the Fed to begin curtailing its stimulus at its next meeting this month.
The shutdown will halt federal agency reports on the economy. A Commerce Department report on construction spending due today won?t be released as scheduled and the Labor Department won?t publish its closely watched monthly employment report on Oct. 4 if the government remains closed.
Data today from the privately run Institute for Supply Management showed U.S. manufacturing expanded in September at a faster pace than forecast, indicating U.S. factories will provide a bigger boost to the expansion.
Earnings at S& P 500 companies grew 1.8 percent last quarter, projections compiled by Bloomberg show. Alcoa Inc., Yum! Brands Inc. and Safeway Inc. are among the 316 companies in the gauge scheduled to report in October. Analysts? forecasts show earnings will increase at the fastest pace in two years during the fourth quarter.
The Chicago Board Options Exchange Volatility Index, or VIX, slipped 6.4 percent to 15.54 today, halting a three-day advance. The equity volatility gauge is down 14 percent this year.
All 10 main S& P 500 groups climbed more than 0.3 percent today, with health-care companies rising 1.3 percent to lead advances.
Dow sentiment seems good. :)
Its green at this moment at
60+ bishan22 ( Date: 01-Oct-2013 16:34) Posted:
| Dow future is green. Lets see whether it will pull up the situation. Good luck. |
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Sifu, i also longed Dow ard 11pm. Huat huat la!
Isolator ( Date: 01-Oct-2013 23:23) Posted:
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