Indian ADRs end higher though
US stocks fell on Thursday, 03 October 2013 as the government shutdown continued for the third day without any strong indications a resolution to the stalemate may be on the horizon. Even though stocks appeared largely unconcerned during the first two days of the shutdown, today's session featured a reminder from the Treasury, saying the consequences of a default could be worse than the events of 2008.
Stocks bounced off intraday lows following a report that House Speaker John Boehner is determined to prevent a federal default as the Treasury Department warned that such a default would have potentially catastrophic effects.
The Dow Jones Industrial Average fell 136.66 points, or 0.9%, to 14,996.48. The S&P 500 index closed down 15.21 points, or 0.9%, at 1,678.66. The Nasdaq Composite dropped 40.68 points, or 1.1%, to 3,774.34.
Industrials and utilities stocks fared worst among the S&P 500 sectors, while telecom and consumer staples showed the smallest declines.
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Boeing performed worst among Dow components, losing 2.2%. The aerospace giant has warned about delays for its jet and defense businesses due to the shutdown. United Technologies too issued a similar alert.
Equities retreated throughout the morning before finding support in the early afternoon following an article in The New York Times indicating Speaker of the House John Boehner told Republicans he would not allow a default to take place. The story was followed by a statement from the Speaker's office, which said this has always been Mr. Boehner's stance.
The partial U.S. government shutdown is in its third day on Thursday. On Thursday afternoon it appeared there was just a little movement from the U.S. Speaker of the House Boehner toward compromise. But much more movement is need from Congress to get this budget issue resolved quickly. There is growing anxiety in the world market place but no panic yet. However, if the U.S. lawmakers' impasse drags on over the weekend and into next week, trader and investor anxiety will increase dramatically. And if confidence in the market place continues to wane, the odds will grow price volatility will increase in many markets.
Some U.S. government reports have been postponed due to the government furloughs, including Friday's monthly employment report. Non-government U.S. economic reports will be issued as scheduled.
The September ISM Non-Manufacturing Index fell to 54.4 from 58.6 while the consensus expected the index to drop to 57.2. Last month's reading of the ISM Non-Manufacturing Index was the highest since December 2005 and was expected to pullback in September. The size of the pullback; however, was very unusual.
Labor Department reported that initial claims edged up by 1,000 to 308,000 in the week ended Sept. 28. Market had expected claims to rise to 313,000 on a seasonally adjusted basis. The four-week average, a more reliable measure than the weekly number, fell to its lowest level since May 2007. The monthly average dropped 3,750 to 305,000.
Meanwhile, the government said continuing claims in the week ended Sept. 21 rose by 104,000 to a seasonally adjusted 2.93 million, an increase related to California's computer troubles last month. Continuing claims reflect the number of people already receiving benefits.
Reports overnight said China's official non-manufacturing purchasing managers' index rose to a six-month high of 55.4 in September, from 53.9 in August. Meantime, the Markit European Union PMI rose to 52.2 in September from 51.5 in Augustthe fastest growth pace in over two years for the EU. Any PMI reading above 50.0 suggests economic growth.
Bullions ended lower on Thursday, 03 October 2013 at Comex. Gold futures closed modestly lower to log their third losing session in four as the U.S. government shutdown stretched to a third day. As the trading day progressed bargain hunting and safe-haven buying interest were featured. Focus of the market place continues to be on the partial closure of the U.S. government.
Gold for December delivery fell $3.10, or 0.2%, to settle at $1,317.60 an ounce on the Comex division of the New York Mercantile Exchange. December silver fell 11 cents, or 0.5%, to end at $21.79 an ounce.
Crude Oil prices closed lower on Thursday at Nymex, 03 October 2013 marking a fourth session loss in five, with traders continuing to fret over the U.S. government shutdown as they looked to economic data from China and the U.S. to gauge the prospects for energy demand and watched a newly formed tropical storm in the Gulf of Mexico. Crude oil for November delivery fell 79 cents, or 0.8%, to settle at $103.31 a barrel.
Indian ADRs ended higher on Thursday. In the IT space, Infosys rose 0.51% at $49.15 and Wipro gained 0.2% at $10.52. In the banking space, HDFC Bank added 4.61% at $33.34 and ICICI Bank advanced 2.98% at $32.11. In the other sectors, Tata Motors gained 2.6% at $28.01 and Dr Reddys Laboratories was up 0.3% at $38.70.
Tomorrow's September nonfarm payrolls report will not be released due to the ongoing government shutdown.
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