Investor apprehensions of a possible government shutdown
dragged the major indices lower on Friday. Lawmakers struggled to
strike a deal to avoid such a situation. The Dow Jones and the
S&P 500 registered their first weekly drop after finishing in
the green for four consecutive weeks. A couple of domestic
reports were also released on Friday. Both personal income and
spending increased in the month of August. On the other hand,
consumer sentiment declined to its lowest level in roughly five
months. The materials sector was the biggest loser among the
S&P 500 industry groups. Consumer discretionary stocks
finished marginally in the green.
For a look at the issues currently facing the markets, make sure
to read today's
Ahead of Wall Street
The Dow Jones Industrial Average (DJI) lost 0.5% to close the day
at 15,258.24 The S&P 500 slipped 0.4% to finish Friday's
trading session at 1,691.75. The tech-laden Nasdaq Composite
Index decreased 0.2% to end at 3,781.59. The fear-gauge CBOE
Volatility Index (VIX) jumped 10.0% to settle at 15.46.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 5.5 billion shares,
considerably lower than 2013's average of 6.3 billion shares.
Declining stocks outnumbered the advancers. For 64% shares that
declined, only 32% advanced.
The Dow declined 1.3%, the S&P 500 fell 1.1% and the Nasdaq
added 0.2% over the week. Out of the last seven trading sessions,
the Dow and S&P 500 have ended in the red for the six trading
session. The primary reason behind the stock markets downward
movement in recent days is fears that the US Government will run
out of cash to pay its bills.
On Friday, the Senate passed the emergency funding bill to avoid
a possible government shutdown. But this must be approved by a
House dominated by Republicans. President Barack Obama said the
Senate had acted sensibly by passing the emergency funding bill.
He urged Republicans in the House of Representatives to act in a
similar manner. Lawmakers must reach common ground before October
1 to avoid a government
On the domestic front, the U.S Department of Commerce reported
personal income and consumption expenditures numbers. Personal
income increased 0.4% in the month of August, in line with the
consensus estimate. Disposable personal income edged up 0.5%.
Personal consumption expenditures increased 0.3% in August
after gaining 0.2% In July.
On the other hand, consumer confidence declined to its lowest
level in nearly five months. According to the Thomson
Reuters/University of Michigan, consumer sentiment declined to
77.5 from August's figure of 82.1. This was below the
consensus estimate of 78.1. Other gauges also touched their
lowest level since April. The gauge of consumer expectations
declined to 67.8. Economists think that consumer sentiment may
deteriorate further if higher interest rates begin to slow
momentum in the housing market.
Meanwhile, BlackBerry Ltd (NASDAQ:
) reported a huge loss of roughly $1 billion. The company's
revenue declined 45% to $1.6 billion from a year ago. A sizeable
portion of these losses is attributable to a write-down of around
$934 million for its unsold Z10 smartphones. The company is also
planning to lay off 4,500 employees.
The material sector was the biggest loser among the S&P 500
industry groups and the Materials Select Sector SPDR (XLB) lost
1.2%. Stocks such as E I Du Pont De Nemours And Co (NYSE:
), LyondellBasell Industries NV (NYSE:
), Air Products & Chemicals, Inc. (NYSE:
), The Dow Chemical Company (NYSE:
) and FMC Corp (NYSE:
) slipped 0.8%, 0.8%, 1.9%, 0.5% and 0.2%, respectively.
Nine out of the ten sectors in the S&P 500 industry groups
ended in negative territory. However, consumer discretionary
stocks ended marginally higher. The Consumer Discretionary
SPDR (XLY) gained 0.02%. Stocks such as Time Warner Inc (NYSE:
), Comcast Corporation (NASDAQ:
), Viacom, Inc. (NASDAQ:
), Starbucks Corporation (NASDAQ:
) and Nike Inc (NYSE:
) added 2.1%, 1.5%, 0.7%, 0.2% and 4.7%, respectively.
AIR PRODS & CHE (APD): Free Stock Analysis
BLACKBERRY LTD (BBRY): Free Stock Analysis
COMCAST CORP A (CMCSA): Free Stock Analysis
DU PONT (EI) DE (DD): Free Stock Analysis
DOW CHEMICAL (DOW): Free Stock Analysis
FMC CORP (FMC): Free Stock Analysis Report
LYONDELLBASEL-A (LYB): Free Stock Analysis
NIKE INC-B (NKE): Free Stock Analysis Report
STARBUCKS CORP (SBUX): Free Stock Analysis
TIME WARNER INC (TWX): Free Stock Analysis
VIACOM INC-B (VIAB): Free Stock Analysis
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