Political altercations over the ongoing budget issue increased investor tensions about a lengthy government shutdown. Consequently, major indices slipped into negative territory even as the partial government shutdown entered its second day. Meanwhile, a battle over the federal debt ceiling is also on the cards. Hiring in the private sector came in below expectations for the month of September. Industrials were the biggest losers among the S&P 500 industry groups. Energy stocks emerged as the major gainer.
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The Dow Jones Industrial Average (:DJI) lost 0.4% to close the day at 15133.14 The S&P 500 declined 0.1% to finish yesterday’s trading session at 1693.87. The tech-laden Nasdaq Composite Index fell 0.1% to end at 3815.02. The fear-gauge CBOE Volatility Index (:VIX) jumped 6.8% to settle at 16.60. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 5.3 billion shares, considerably lower than 2013’s average of 6.3 billion shares. Declining stocks outnumbered the advancers. For 42% shares that advanced, 54% declined.
Democrats and Republicans are still struggling to resolve the ongoing budget issue. The partial government shutdown has left almost 800,000 workers out of work. In an effort to reach a conclusion Senate Majority Leader Harry Reid sent a letter to John Boehner and called him for a budget talk. But the conversation failed to reach any conclusion.
President Barack Obama said: “I am exasperated with the idea that unless I say to 20 million people you can’t have health insurance, these folks will not reopen the government.” He further added: “The only thing that’s stopping it right now is that John Boehner has not been willing to say no to a faction of the Republican Party that are willing to burn the house down because of an obsession with my health-care initiative.”
Meanwhile, Automatic Data Processing’s (NASDAQ:ADP) National Employment report revealed that the U.S. private sector added 166,000 jobs in September compared to August’s revised figure of 159,000. This was below expectations of 180,000. August’s figure was sharply revised downwards from 176,000 to 159,000. The report also revealed that small business added 74,000 jobs while medium and large business added 28,000 and 64,000 more employees during the month. The services sector added 147,000 jobs whereas the goods-producing sector accounted for 19,000 more jobs. Construction and professional/business services added 16,000 and 27,000 jobs respectively. However, jobs in financial activities declined by 4,000.
On the earnings front, Monsanto Company (NYSE:MON) reported fourth quarter results. The company’s earnings and revenue came in below the Street’s estimates. In the fourth quarter the company lost $249 million in comparison with a loss of $229 million a year ago. The company also forecasted earnings for fiscal 2014 below expectations. Meanwhile, Monsanto has also decided to buy Climate Corp. for roughly $930 million.
Industrials were the biggest loser among the S&P 500 industry groups and the Industrial Select Sector SPDR ( XLI) lost 0.5%. Stocks such as United Technologies Corporation (NYSE:UTX), Honeywell International Inc. (NYSE:HON), Lockheed Martin Corporation (NYSE:LMT) Astec Industries, Inc. (NASDAQ:ASTE) and Northrop Grumman Corporation (NYSE:NOC) slipped 2.2%, 0.5%, 1.9%, 1.1% and 1.0%, respectively.
The energy sector was the major gainer among the S&P 500 industry groups and the Energy Select Sector SPDR ( XLE) gained 0.2%. Stocks such as Exxon Mobil Corporation (NYSE:XOM), Murphy Oil Corporation (NYSE:MUR), Hess Corp. (NYSE:HES), ConocoPhillips (NYSE:COP) and Anadarko Petroleum Corporation (NYSE:APC) added 0.1%, 1.9%, 1.6%, 0.5% and 1.3%, respectively.
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