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Thursday, October 27, 2016

New York City (AFP) – U.S. stocks Monday finished lower as a partial U.S. government shutdown entered its second week with no sign of resolution.

At the closing bell, the Dow Jones Industrial Average fell 135.76 (0.90 percent) to 14,936.82.

The broad-based S&P 500 tumbled 14.31 (0.85 percent) to 1,676.19, while the tech-rich Nasdaq Composite Index gave up 37.36 (0.98 percent) at 3,770.40.

The paralysis in Washington continued to weigh on markets. Analysts have expressed particular concern that the fight over the budget will stymie efforts to raise the budget ceiling, resulting in a U.S. default with damaging economic consequences.

However, the market still considers a U.S. default unlikely, said Peter Cardillo, chief market economist at Rockwell Global Capital.

“If the markets were really fearful of a default…. we wouldn’t be down a half a percent or three-quarters of a percent,” Cardillo said. “We would be down a heck of a lot more.”

Banking equities were among the hardest-hit. Dow component JPMorgan Chase fell 1.6 percent, Citigroup dropped 2.0 percent and Wells Fargo dipped 1.7 percent.

Dow component Boeing dropped 0.4 percent after Japan Airlines announced a massive $9.5 billion aircraft order with competitor Airbus. The decision challenged Boeing’s dominance in the Japanese market.

Dow component IBM took a 1.1 percent hit after Barclays downgraded the stock to “equal weight” due to the lack of near-term catalysts for the stock.

Other technology companies also suffered, including Microsoft (down 1.7 percent), Amazon (down 2.8 percent), Priceline (down 1.9 percent) and eBay (down 1.8 percent).

An exception was Apple, which advanced 1.0 percent after Jefferies upgraded the stock to “buy” following meetings with Asian suppliers who were enthusiastic about upcoming Apple products.

Cooper Tire & Rubber tumbled 12.8 percent as doubts rose over the prospects of a $2.5 billion takeover of the company by India’s Apollo Tyres. Apollo has sought a reduction in the price of the transaction, but Cooper maintains no cut in price is warranted.

Defense contractor Lockheed Martin rose 0.9 percent after the company reduced the number of workers sent home without pay to 2,400 from 3,000 following the Pentagon’s decision to recall most of its furloughed employees.

Bond prices rose. The yield on the 10-year U.S. Treasury slipped to 2.63 percent from 2.65 percent Friday, while the yield on the 30-year Treasury dropped to 3.70 percent from 3.73 percent. Prices and yields move inversely.


AFP Photo/Stan Honda

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Copyright 2013 The National Memo
  • Lynda Groom

    Well this is no surprise. In a couple of weeks if the disfunctional Congress insists upon destruction the market will collapse and lose 2,000 points seemingly overnight. We have been warned repeatedly not to engage in such activity, but some just don’t get the message. Unfortunately only a handful of the republicans in the House were in office in the 90’s, so they have no idea of the damage their party did to the country…and too themselves.

  • JSquercia

    I am reminded of the scene from Network where they tell the CRAZY newsman ” You have messed with the primal forces of the Universe” and then rub him out .

    I think that may soon happen to Mr Boehner

  • Dominick Vila

    I bet the GOP is delighted about this. The last thing they want going into a midterm election is a robust economy, prosperous corporations, low unemployment, and a stock market at record highs.
    Wall Street is, clearly, concerned about the potential impact the government shutdown may have to our recovering economy, potential impact to our credit rating, and the likelihood of foreign investors moving to Europe, Brazil, and Asia.
    Hopefully, leadership and cool heads will tackle and solve this problem soon, before irreparable damage is done, otherwise we may be facing international problems, including inability to borrow at current interest rates almost impossible. The consequence is that we will have no choice but to raise taxes at all levels of our society to pay for what we need or do without.

  • Eleanore Whitaker

    Not to worry Bonny Boney loves every minute of the President he stole from Obama. He is no longer concerned that HE isn’t the president’s equal. He’s making all the decisions and his Board of “Directors” are taking over our government. How does it feel to lose your freedom and democracy. At this very minute, McConnell the GOP Bull Mafiosi is demanding an end to all restrictions on campaign donations with SC approval. If the GOP gets this, your government is gone…

  • docb

    And interest rates on short term treasuries are blowing out this morning…The markets are getting wary of the repub bagger intractability..Disgusting repub trash!.

  • jointerjohn

    How many of the perpetrators of this mess in Congress will repurchase stocks at the low levels they are driving them to? The day before they relent and issue a CR and raise the debt ceiling I believe. Heck why hurry! Let the market fall enough to make it worthwhile.

  • Brent

    Oh but it is OK to not pay your bills in full, because some Representative says he does just that ~ so much for Credit Reliability…..
    This is OK, if you don’t mind letting your credit rating slip, or creditor calls, or paying exorbitant late fees ~ NOT what I want for America; our credit rating slipped last time and WE are paying more in Interest (penalty fees) on all our outstanding debt from already stretched thin Tax dollars because of it….

  • Pamby50

    We don’t need the stock market going crazy. So many people with 401K’s will take a big hit. This coming during the holiday time. People will remember what these lunatics have done. So I am hoping for cooler heads to prevail with the debt limit.