Stocks are falling today as the United States heads towards a
government shutdown. Negative headlines have also emerged from
Italy and China.
S&P 500 futures are down about two-thirds of a percent, while
Germany and France are falling by more than a full percentage
point. Asia mostly declined in the overnight session, led by a 2
percent drop in Tokyo and a 1.5 percent loss in Hong Kong. The
safe-haven Japanese yen is rallying, while economically sensitive
commodities like oil and copper are down.
House Republicans have refused to pass a budget for the fiscal year
starting tomorrow unless the White House's health-care overhaul
known as Obamacare is delayed. Battle lines hardened over the
weekend, making a shutdown this week almost inevitable. In
addition, a likely fight over raising the nation's debt ceiling
looms in mid-October. Given the timeframe, the situation has the
potential to get worse before it gets better.
In addition, five Italian ministers allied with Silvio Berlusconi
resigned from the government of Enrico Letta, presenting the risk
of political crisis in one of the world's most heavy indebted
countries. Chinese manufacturing data also missed expectations in
the overnight session, the first time in several months that
economic numbers from the country have disappointed.
A mood of uncertainty was spreading even before these developments,
highlighted by the Federal Reserve's surprise failure to slow bond
purchases on Sept. 18. That move drove the S&P 500 to a record
high, but the index has fallen steadily since.
Bonds have also been gaining since the Fed's announcement,
reversing a four-month selloff prompted by signs of an improving
economy. That trend of fixed-income strength, with yields falling,
The S&P 500 may try to bounce because it's indicated to open
near the 1670 level where it formed peaks in May and August. Guy
Adami has also identified this price range as support. (View our
webinars for more insights from traders such as Adami, Jon Najarian
and Pete Najarian.)
Currencies are following the bearish trend today, with the euro
falling and the Japanese yen gaining across the board. Commodities
paint a similar picture, with oil down about 1 percent. Copper and
precious metals are also lower and agricultural products are mixed.
This week features a busy agenda of economic items, including
European and United States manufacturing data tomorrow and non-farm
payrolls on Friday. Today's only release is the Chicago Purchasing
Managers index at 9:45 a.m. ET. (See our
In company-specific news, Achillion Pharmaceuticals is indicated to
open down by more than 50 percent after the Food and Drug
Administration refused to approve the company's experimental
hepatitis C drug because of liver complications.
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