Consumer staples and energy sectors lead the laggards on a sector basis
US stocks ended with triple digit losses on Monday, 30 September 2013. Stocks stumbled out of the gate as political uncertainty in Washington and Italy caused participants to reduce their risk exposure. In Washington, the federal government is on track to shut down at midnight following a game of political ping pong between the House of Representatives and the Senate. The two legislative bodies spent the day exchanging competing bill proposals with the House seeking to make changes to Obamacare while the Senate refused to engage in debate that would jeopardize funding for the health care law.
After a 191-point decline, the Dow Jones Industrial Average finished at 15,129.67, down 128.57 points, or 0.8%. The blue-chip index climbed 2.2% in September and 1.5% for the quarter. The S&P 500 index lost 10.2 points, or 0.6%, to 1,681.55, with consumer staples and energy the leading laggards among its 10 major industry groups, all of which fell. The index rose 3% in September and 4.7% for the quarter. The Nasdaq Composite declined 10.12 points, or 0.3%, to 3,771.48, rising 5.1% for the month and nearly 11% for the quarter.
There has been no apparent progress made by U.S. legislators on agreement on the U.S. budget. Also, in just two weeks the U.S. government will hit its borrowing limit. These issues are presently an underlying bearish factor for many markets and could become a major bearish factor in the next couple weeks.
Economic data was limited to the September Chicago PMI report, which increased to 55.7 from 53.0 (consensus 53.7), representing the strongest reading since February. The Production Index improved to 58.0 from 53.0 with the increase completely due to continued strengthening in new orders. The new orders index increased to 58.9 from 57.2. Another month of accelerating production gains may not be in the cards. Order backlogs have contracted each of the previous four months, putting the index at 46.7. Without a steady supply of backlogs, production gains will completely rely on new orders, and maintaining new orders at their current elevated levels may be difficult.
Overseas, the Italian government is on the ropes after five PDL ministers withdrew their support for the current legislature at the request of party leader Silvio Berlusconi. With the country's future in question, Prime Minister Enrico Letta is expected to appear in front of parliament on Wednesday to seek a new majority.
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Crude oil futures slipped on Monday, 30 September 2013 pulling back as 11th-hour talks to avoid a government shutdown didn't inspire much investor confidence that Washington would be back to business as usual later in the day. Prices also finished lower, bogged down by weaker-than-expected manufacturing data from China as well as the shutdown fears that rattled markets.
Crude oil for November delivery shed 54 cents, or 0.5%, to settle at $102.33 a barrel on the New York Mercantile Exchange. For the month, oil prices ended up losing 4.9%, though they registered a 6% gain for the third quarter.
Bullion prices ended lower at Comex on Monday, 30 September 2013. Focus of traders and investors worldwide is the U.S. budget impasse that threatens a partial shut- down of the U.S. government starting Tuesdayn which would be the first government shutdown in 17 years. Gold for December delivery fell $12.20, or 0.9%, to settle at $1,327 an ounce on the Comex division of the New York Mercantile Exchange. Gold futures suffered monthly loss of about 5%, but jumped 8.4% for the quarter. The quarterly gain was the first since the quarter ended Sept. 28, 2012. As of Monday's close, gold futures have lost roughly 21% this year to date.
Like gold, silver settled lower for the session and month, but with a gain for the quarter. December silver shed 12 cents, or 0.6%, on Monday to close $21.71 an ounce. Prices lost 7.7% for the month, and rose 11.5% for the quarter.
Treasury prices were mostly higher, with the yield on the 10-year note used in figuring mortgages and other consumer loans down 1 basis point at 2.615%. The 10-year note closed 13 basis points higher on the quarter.
The dollar fell against the currencies of major U.S. trading partners excluding the yen but including the euro.
For every two shares rising, roughly three fell on the New York Stock Exchange, where 878 million shares traded. Composite volume approached 3.3 billion.
Tomorrow, August construction spending and the September ISM Index will both be reported at 10:00 ET.
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