Loading...
 

After the Close - The U.S. stock market put in a weak session today. Notably, equities headed lower at the open, and traders were unable to turn things around over the remainder of the session. At the close of the day, the Dow Jones Industrial Average was off 136 points; the broader S&P 500 Index ended lower by 14 points; and the technology-laden NASDAQ, which was quite weak today, surrendered 37 points. Market breadth was decidedly negative, as declining stocks outnumbered advancers by roughly three-to-one margin on the New York Stock Exchange.

All of the major market sectors lost ground today, which further suggested widespread weakness. There were losses in select consumer names. The financial issues were also quite weak. Further, the technology stocks, which have shown some leadership recently, performed poorly today. In contrast, the high-yielding utilities displayed some relative strength, but still ended down slightly.

Technically, the S&P 500 Index is quite close to its 50-day moving average, located at about 1,680. Hopefully, this area, which is widely watched by technical traders will provide some support, at least temporarily. Meanwhile, traders have become more apprehensive, as the VIX jumped about 15% today, to finish above 19.

There were no major economic reports released today, and due to the government shutdown, many of the releases slated for the next few days may not be issued, as planned. This is unfortunate, as traders do not like information vacuums, or ongoing uncertainty, for that matter. Meanwhile, the government shutdown, as it persists longer, leaves traders to speculate about its impact on numerous fronts. Further, looming on the horizon is the issue of the nation’s debt ceiling, and that is a highly charged subject. Indeed, a failure to raise the debt limit could have far-reaching financial and economic consequences.

On the bright side, the third-quarter corporate earnings season is set to start up, and that should offer traders some information to ponder. Hopefully, the barrage of reports set to be released will be positive overall. It is important to note that the stock market has come a long way over the past year, and equities are, in many cases, trading at price- to-earnings multiples that leave little room for error.  While the news was quiet today, shares of Blackberry (BBRY) ended higher on reports that a few major technology companies might be interested in acquiring all, or some, of the struggling mobile device maker’s business. – Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

-

12:00 PM EST - U.S. equity markets opened on the down side today, and the bears remained in control throughout the entire morning. Trading sentiment continues to be weighed down by the ongoing U.S. government shutdown and looming October 17th deadline to raise the $16.7 trillion debt ceiling. 

As the dual impasse drags on, investors are increasingly putting a premium on safety. Notably, 10-year Treasury bond yields are down over 1% while gold has made an equal move upward. Meanwhile, the Chicago Board Options Exchange’s VIX volatility index (also known as the “fear” index) was up nearly 10%, marking its highest level since June.

At the noon hour of New York trading, the Dow Jones Industrial Average, S&P 500, and NASDAQ were all up from their lows of the morning but were still down about a half percentage point overall.

Across the Atlantic, European stocks were largely down, with London’s FTSE and Germany’s DAX off by one-third and one-half a percentage point, respectively. France went against the tide, however, managing to recoup its early losses and claw its way back to break even. Stocks there got a lift from Airbus winning a $9.8 billion deal to supply aircraft to Japan Airlines.

Overnight trading in Asian markets was also weighed down by the U.S. Government standoff. Adding to the gloom in the Far East was the World Bank’s recent lowering of growth forecasts for China and East Asia. The Washington-based development bank now looks for China’s economy to grow by 7.5% this year, versus a forecast of 8.3% growth back in April.   - Mario Ferro

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

-

Stocks to Watch from The SurveyEarnings season kicks off tomorrow, but corporate news is fairly quiet today. However, there are some stocks that will likely see active trading. For example, shares of Outerwall (OUTR) are up sharply ahead of the bell, after investment fund Jana Partners said that it has amassed a 13.5% stake in the operator of Red Box DVD rental kiosks. Jana is expected to meet with management to discuss strategic alternatives, including a potential sale of the company. – Matthew E. Spencer 

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.

Before The Bell - The new trading week begins with still no budget agreement between the bickering parties on Capitol Hill. The subsequent government shutdown—now in its seventh day—continues to cast a significant cloud over Wall Street, as each passing day with no fiscal accord in place threatens the health of the U.S. economy. If the stalemate continues to linger, a considerable downward revision to the nation’s GDP seems inevitable.

Overnight, Asia’s major indexes—particularly Japan’s Nikkei (down 1.2%)—fell on the U.S. budget concerns and the ramifications it may ultimately have on the international markets. The U.S. fiscal worries are also taking a toll today on the major European bourses, which are notably lower as trading enters the second half of the session on the Continent.

The concerns both here and abroad come following a weekend where little-to-no progress was made toward hammering out a new budget. Even more troublesome in the eyes of investors are that the negotiations to raise the debt ceiling by its October 17th deadline are now being attached to the budget deal. A lack of any agreement to raise the debt ceiling would have far more dire financial and economic consequences both on the domestic and international fronts. Speaker of the House John Boehner stoked such fears this past weekend during a television interview in which he noted that the House would not agree to raise the U.S. debt ceiling without “serious” talks about what is driving debt levels higher. Senate Democrats called the Republican-led House’s position “reckless”. The current contentious negotiations, which are weighing on the value of the U.S. dollar and the U.S. equity futures this morning (more below), will probably raise the market’s near-term volatility.

The soap opera on Capitol Hill is likely to remain the focus of investors on the eve of the commencement of third-quarter earnings season. That busy, roughly 30-day, stretch officially begins after the close of trading tomorrow when aluminum producer Alcoa (AA) releases its latest quarterly results. The bulk of the earnings reports begin to flow in next week.

Meantime, we are also scheduled to get some notable economic data this week, but a few of those reports that are produced by the government could be postponed by the aforementioned shutdown. A similar fate was seen last week when the shutdown delayed the Labor Department’s release of September employment and unemployment data, which was supposed to be released on Friday. Investors should also be aware that the minutes from the latest Federal Open Market Committee (FOMC) meeting will be released this Wednesday at 2:00 P.M. (EDT). That report is likely to be closely watched, as investors try to get a better gauge on when the central bank will begin tapering its bond-buying activity. The FOMC meeting will begin its two-day monetary policy meeting on October 29th.

As noted, the international equity markets have witnessed significant selling so far today. That, along with sharply lower U.S. equity futures, presage a markedly lower opening for the U.S. equity market when trading gets under way in less than an hour from now. Too, we expect a spike in the market’s volatility until some budget deal is in place on Capitol Hill, however bleak that situation is looking at this moment. Stay tuned. – William G. Ferguson

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.