Sharechat Logo

While you were sleeping Stocks down, bonds up

Tuesday 8th October 2013

Text too small?

US stocks fell, while Treasuries rose, amid continuing concern about the ongoing impasse over US federal government funding and the potential risk of a debt default.

In afternoon trading in New York, the Dow Jones Industrial Average dropped 0.57 percent, the Standard & Poor's 500 Index shed 0.49 percent, and the Nasdaq Composite Index fell 0.68 percent.

Declines in Visa, Microsoft and American Express, down 1.6 percent, 1.4 percent and 1.2 percent respectively, paced losses in the Dow.

"With each political party pointing fingers at the other as the cliff approaches, investors feel not only rising risks brought about by growing uncertainty but also that those risks are becoming less transparent because of the lack of data collection," Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York, told Reuters.

The CBOE Volatility index, Wall Street's so-called fear gauge, climbed 10.1 percent to 18.44, the highest level in more than three months.

On Sunday Treasury Secretary Jacob Lew told CNN that Congress was "playing with fire" in its deadlock over raising the country's debt limit.

"On the 17th, we run out of our ability to borrow," Lew said on CNN's 'State of the Union'. "If they don't extend the debt limit, we have a very, very short window of time before those scenarios start to be played out."

"We've never gotten to the point where the United States government has operated without the ability to borrow. It's very dangerous," Lew said. "It's reckless, because the reality is, there are no good choices if we run out of borrowing capacity and we run out of cash."

Even so, Moody's Investors Service said it sees a "very low" chance the US will default on its debt payments. The impact of the partial government shutdown on the economy may not be particularly damaging in the short term, and the effect would be seen gradually over time if it was an extended one, Moody's Chief Executive Officer Ray McDaniel told Bloomberg on October 5.

Shares of BlackBerry gained, last up 4.9 percent to C$8.27, amid reports the company has attracted interest from Cisco Systems, Google and SAP.

US earnings season is set to get underway. Alcoa, the country's largest aluminum producer, is scheduled to release third-quarter results after the market close on Tuesday.

Profits for the broad index probably increased 1.7 percent during the third quarter while sales rose 2.2 percent, according to analysts' estimates compiled by Bloomberg.

In Europe, the Stoxx 600 Index ended the day with a 0.2 declined from the previous close. The UK's FTSE 100 slide 0.3 percent, while Germany's DAX fell 0.4 percent. France's CAC 40 closed little changed.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: NZ shares edge lower; power companies under pressure
NZ dollar rises as bets on another OCR cut fade
Broad-based manufacturing pick-up offers silver lining
Global economic outlook not as dark as in August: RBNZ
NZ dollar slips on slew of weak global data, lack of US-China progress
MARKET CLOSE: NZ shares recover as investors re-think RBNZ review
NZ dollar falls on weak Aussie jobs numbers, poor China data
Govt media plan won't weaken commercial players - TVNZ
Goodman trust's 1H net profit quadruples on unrealised property gains
Regional house price inflation accelerates in October

IRG See IRG research reports