Effects of the Shutdown Weigh on the Dow, S&P 500

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"The only news of note was the ADP jobs report, which came in a little worse than expected," said Schaeffer's Senior Equity Analyst Joe Bell, CMT. "The saga continues with the U.S. government, as today marks the second day of the shutdown." As a result, the Dow Jones Industrial Average (DJI) tumbled into negative territory.

Continue reading for more on today's market, including :

  • In today's edition of Bernie Schaeffer on Charts , our founder and CEO explains why iShares Barclays 20+ Yr Treasury Bond (TLT) traders should keep an eye on round-number returns.
  • Schaeffer's Senior Trading Analyst Bryan Sapp explains why the bulls are still in control, and defines the "line in the sand" for the S&P 500 Index (SPX).
  • In his latest Chart of the Day offering, our Senior Options Strategist Tony Venosa, CMT, takes a closer look at trading prospects for Aetna ( AET ).
plus...
    Banking bigwigs aired their concerns to President Barack Obama, BlackBerry ( BBRY ) may have received another buyout bid, and Tesla Motors ( TSLA ) was slapped with a downgrade.

The Dow Jones Industrial Average (DJI - 15,133.14) stumbled right off the bat this morning, tagging an intraday low of 15,044.71 within the first hour of the session. After remaining in the red throughout the day, the blue-chip bellwether finished 58.6 points, or 0.4%, lower. The Dow's 13 advancers were led by 1% gains for Microsoft ( MSFT ) and JPMorgan Chase ( JPM ), while United Technologies (UTX) paced the 17 laggards with a decline of 2.2%.

The S&P 500 Index (SPX - 1,693.87) chugged along in similar fashion, sinking to a session low of 1,680.34 early in the day. By the close, the index was off 1.1 points, or 0.1%. Meanwhile, the Nasdaq Composite (COMP - 3,815.02) shed 3 points, or 0.1%, after registering yet another 13-year high in early afternoon trading.

Elsewhere, the CBOE Market Volatility Index (VIX - 16.60) spiked at the opening bell, climbing as high as 16.81 during the morning hours of trading. For the day, the "fear barometer" added 1.1 points, or 6.8%.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"After an early rush of selling, it was very encouraging to see yesterday's low hold as support on the S&P 500," continued Bell. "With so much uncertainty out of Washington, it seems like the market is currently in the midst of a lot of choppy, sideways price action."

3 Things to Know About Today's Market :

  • Automatic Data Processing (ADP) said the private sector added 166,000 jobs in September, compared to the previous month's gain of 159,000. Economists, on average, were expecting employers to add 180,000 jobs. For the third quarter, the economy added an average of 162,000 jobs per month, compared to 220,000 at the beginning of 2013. (MarketWatch)
  • A number of bank chiefs met at the White House today to warn President Barack Obama of the ill effects the shutdown and debt limit could have on the financial sector if the issues are not resolved. "We shouldn't use the threat of causing the U.S. to fail on its obligations to repay its debt as a cudgel," noted Lloyd Blankfein, CEO of Goldman Sachs (GS). If Congress is unable to find a resolution before Oct. 17, the Treasury will surpass its borrowing capacity, thus leaving the U.S. unable to pay its bills in their entirety. (CNNMoney)
  • Rumors of another potential bid for BlackBerry ( BBRY ) circulated through the Street, as sources familiar with the matter said the struggling telecom concern has attracted interest from Cerberus Capital Management LP. This comes on the heels of another bid from Fairfax Financial Holdings Inc, which offered to take BBRY private for $4.7 billion last month. (Reuters)

5 Stocks We Were Watching Today :

  1. Tesla Motors ( TSLA ) received a downgrade at Baird, although the brokerage firm said it could turn bullish again if certain advances are made.
  2. Despite Ford's (F) strong September sales, one speculator bet on the auto giant to stall over the next several weeks.
  3. Near-term option bulls flocked toward General Electric (GE) , and zeroed in on the security's November-dated calls.
  4. Delta Air Lines' (DAL) new all-time high didn't deter put buyers, who predicted a decline for the stock by week's end.
  5. Call volume ramped up on Zynga (ZNGA) again, this time with a focus on the front-month series of options.

EARNINGS

For a look at today's options movers and commodities activity, head to page 2.

STOCKS - NOTABLE CALL ACTIVITY

STOCKS - NOTABLE PUT ACTIVITY

Commodities :

Crude futures snapped their three-day losing streak, thanks to reports that construction on the southern part of TransCanada's (TRP) Keystone pipeline will wrap up by month's end. By the time the dust settled, November-dated oil gained $2.06, or 2%, to end at $104.10 per barrel.

Meanwhile, gold futures also advanced on day two of the government shutdown, as a weaker-than-expected employment report bolstered the precious metal. Gold for December delivery climbed $34.60, or 2.7% to finish at $1,320.70 an ounce.

SCHAEFFER'S MARKET POSTURE



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Options

Referenced Stocks: AET , BBRY , JPM , MSFT , TSLA

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