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Stocks Move Lower to End Week with Four Losing Days

Dan Berman
Hot Stock Minute

Stocks fell again today ahead of a possible government shutdown. The major indexes dropped four out of five sessions this week. The budget battle could lead to a federal shutdown on Tuesday. Prevailing wisdom is that Congress will be able to reach a deal, although it is likely to come at the last minute. In the meantime, traders had the day to digest numbers on Personal Income and Consumer Spending for August. The Commerce Department says both numbers came in on target with rises of 0.4% and 0.3%, respectively. Also out today was the Thomson Reuters/Unversity of Michigan's final reading on consumer sentiment for September. It came in at 77.5. Economists ahd predicted a number of 78.0, though a mid-month reading was 76.8.

POLL: How much would a government shutdown hurt Wall Street?

J.C. Penney (JCP) fell more than 13% today below a critical level of $9.65 a share. That's the price at which the company says it will sell 84 million shares. Penney made the price announcement this morning after revealing plans for the sale yesterday. The whole thing came as a bit of surprise since it was just yesterday morning that CEO Mike Ullman claimed that cash flows for the company were fine. His declaration had in fact sent shares soaring in the regular session. Even prior to today's drop, J.C. Penney stock had fallen 50% so far this year.

Another ailing company, BlackBerry (BBRY), spent the day in the green following release of its quarterly earnings. Shares closed higher by less than 1% on news that losses were 47-cents a share versus estimates of 49-cents. As for revenues, they missed the mark slightly at $1.57 billion versus estimates of $1.61 billion. CEO Thorsten Heins expressed his disappointment in a press release, but there was no conference call. The company canceled that earlier in the week. On Monday BlackBerry said it agreed to be acquired by Fairfax Financial for $9 a share, though no deal has been sealed. Fairfax is BlackBerry's largest shareholder.

Lumber Liquidators (LL) fell 6% on news of a federal search at the company's headquarters in Toano, Virginia as well as a site in Richmond. Members of Immigration and Customs Enforcement's Homeland Security Investigations executed warrants which were issued yesterday. The warrants were sealed, but Lumber Liquidators says they stemmed from the importation of certain wood flooring products. Lumber Liquidators is the largest specialty retailer of hardwood flooring in North America with more than 300 stores. Prior to today, the company's stock had more than doubled this year.

Nike (NKE) shares rose over 4% and hit a new all-time high after reporting quarterly earnings of 86-cents a share. That ran past estimates of 78-cents. Revenue was basically in line with expectations at nearly $7 billion. Sales were up by $500 million over last year, and profits rose by more than 1/3 in that time. Nike says it's seeing strong demand for athletic gear both here and abroad. The company's basketball and running categories performed particularly well.

Also out with its quarterly report is a company that sells a lot of Nike merchandise: Finish Line (FINL). The stock jumped 9% after reporting quarterly profits of 54-cents a share when estimates were for 45-cents. Sales were $10 million more than expected at $436 million. Finish Line is up 19% year-to-date.

Microsoft (MSFT) rose over 1%, following a report in All Things D stated Ford (F) CEO Alan Mulally has "vaulted to the forefront of candidates to replace Steve Ballmer at Microsoft." The software company announced last month that Ballmer would be leaving within a year. Another potential replacement is Stephen Elop, who's rejoining the company from Nokia (NOK) as part of a deal in which Microsoft is buying the Finnish company's handset business. Prior to today, Microsoft shares had been down 1.5% since Ballmer's impending departure was made public.

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