Posted: Wednesday, October 2nd 2013 at 12:51pm
Stocks continue doward spiral
By The Associated Press
NEW YORK (AP) -- Weak hiring and worries about a protracted government shutdown pushed the U.S. stock market lower Wednesday.
U.S. businesses added 166,000 jobs last month, payroll company ADP said Wednesday, a level consistent with only a modest improvement in hiring. Economists polled by FactSet had forecast 180,000 jobs would be added.
The report may be the only news investors get on hiring this week because the Labor Department will postpone the release of its September jobs survey, scheduled for Friday, if the government shutdown goes past Wednesday.
About 800,000 federal workers were staying home again Wednesday on the second day of the first partial shutdown of the U.S. government since the winter of 1995-96.
Republicans in the House of Representatives are insisting that Democrats negotiate over the new health care law as part of the funding deadlock. Senate Democrats, led by Majority Leader Harry Reid of Nevada, insist that Republicans pass a straightforward temporary funding bill with no strings attached.
"The markets are sending a loud message to Washington lawmakers to get their act together and resolve the budget crisis and move on," said Peter Cardillo, chief market economist at Rockwell Global Capital.
The market moved sharply lower in early trading, then pared its loss in the late morning following news that President Barack Obama had invited Congressional leaders to the White House for a meeting on the shutdown.
The Dow Jones industrial average fell as much as 147 points in the first hour of trading. Shortly before noon it was down 80 points, 0.5 percent, at 15,111 points.
The Standard & Poor's 500 index was down six points, or 0.4 percent, at 1,688. The Nasdaq composite declined nine points, or 0.2 percent, to 3,808.
All 10 industry sectors in the S&P 500 fell. Declines were led by the makers of consumer staples and industrial companies.
Defense companies, which rely on government contracts for a large part of their revenue, led declines for industrial companies. Raytheon fell $2.06, or 2.6 percent, to $75.77. Lockheed Martin dropped $3.08, or 2.4 percent, to $131.60.
The longer the budget fight drags on, the more investors will start to fret about the looming showdown about raising the government's borrowing limit, said Brad McMillan, the Chief Investment Officer at Commonwealth Financial, an investment adviser.
Treasury Secretary Jacob Lew told Congress that unless lawmakers act in time, he will run out of money to pay the nation's bills by Oct. 17. Congress must periodically raise the limit on government borrowing to keep U.S. funds flowing, a once-routine matter that has become locked in battles over the federal budget deficit.
"I'm not going out there and beating my chest and saying the world is coming to an end here," said McMillan. "But we face the possibility for significantly greater disruptions than the market is currently pricing in."
The last time there was an impasse over the borrowing limit, in August 2011, it led to a downgrade of the United States' credit rating by Standard & Poor's and a plunge in the stock market.
In commodities trading, the price of oil climbed $1.48, or 1.4 percent, to $103.51 a barrel. Gold rose $28, or 2.2 percent, to $1,314 an ounce.
The dollar fell against the euro and the yen.
Among stocks making big moves:
- Monsanto fell $1.40, or 1.3 percent, to $103.60, after the company reported a wider loss than analysts were expecting because of weak sales of genetically engineered seeds.
- Global Payments rose $5.27, or 10.4 percent, to $54.96, after the company named a new CEO, sped up share repurchase plans and increased its profit outlook. The company provides electronic transaction processing services for retailers, financial institutions and government agencies.
- Empire State Realty Trust rose 36 cents, or 2.8 percent, to $13.36 after the company's initial public offering raised about $754 million. The company owns the Empire State Building and other office properties in New York and Conneticut.
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