Stocks are falling this morning on signs that a worsening
political situation in Washington may lead to a government shutdown
S&P 500 futures are off about 0.4 percent, while most of Europe
is down about half a percent. Most Asian markets posted small gains
in the overnight session.
The S&P 500 has been trending strongly higher all year and is
now attempting to hold support near the top of the price range
that's taken shape since May. While it's recently benefited from an
improving global economy, uncertainty has been increasing in the
One concern is the future of interest rates because the Federal
Reserve surprised investors by not reducing monetary stimulus last
week. That leaves questions about when and how it will remove
More importantly in the short term is passage of the budget and
limits on the nation's debt. A budget needs to be passed by
Tuesday, Oct. 1, to keep the government running. Republicans also
raised the stakes yesterday evening by trying to link an increase
in the debt ceiling to political goals such as spending cuts. That
increases the likelihood of a default by mid-October.
The nervousness is driving up the price of safe-haven assets such
as the Japanese yen and U.S. Treasury bonds. Gold climbed and
silver rose about 1 percent, while copper is up half a percent. Oil
is down fractionally and agricultural foodstuffs are mixed.
Currencies associated with global growth--namely the Australian and
Canadian dollars--fell, while the euro inched higher.
In addition to uncertainty about the budget, next week is heavy on
economic news. It begins with manufacturing numbers from Asia,
Europe, and the United States before focusing on key employment
numbers later in the week. (See our related
In company-specific news, Nike is indicated up 7 percent and Finish
Line is climbing 10 percent after both companies reported
better-than-expected quarterly results. IT consultancy Accenture
dropped 5 percent after issuing weak guidance. Drug developer
Nektar Therapeutics cratered 25 percent after its NKTR-181 pain
killer failed to meet its primary endpoint in a Phase 2 study.
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