Threats of a Government Shutdown Weigh on the Dow, S&P 500

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"Well, it's a good thing the Dow Jones Industrial Average (DJI) added Nike ( NKE ), because that was about the only bright spot," lamented Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "It was a bad week for big-caps, and today just added to the pain. After a huge start to September, we've definitely hit a weak patch all of a sudden. Uncertainty regarding a potential government shutdown and more Washington drama sure isn't helping much here." As a result, the Dow finished in the red for both the day and week.

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

  • Is Gilead Sciences ( GILD ) poised to trek higher? Schaeffer's Senior Options Strategist Tony Venosa, CMT, makes a bullish case for the biopharmaceutical concern in his latest Chart of the Day .
  • Near-term options bulls continue to descend upon Apple ( AAPL ) in droves, despite the tech giant's lingering technical struggles.
  • In case you missed it: "Sometimes the obvious trade isn't the best trade." Read more of Detrick's pearls of wisdom as he highlights the keys to being a successful trader .
plus...
    The Senate approved its stopgap spending bill, consumer sentiment dropped on a month-over-month basis, and Nike ( NKE ) received a round of earnings-induced bullish brokerage notes.

The Dow Jones Industrial Average (DJI - 15,258.24) spent the entire session parked in the red, and sank to an intraday low of 15,211.81 around 10:00 a.m. ET. By the closing bell, the blue-chip barometer was down 70.1 points, or 0.5%. For the week, the index dropped 1.2% -- its first negative weekly finish in a month. Nike ( NKE ) led the Dow's five advancers with an earnings-induced gain of 4.7%, while Cisco Systems ( CSCO ) once again paced the 25 decliners with a loss of 1.9%.

Likewise, the S&P 500 Index (SPX - 1,691.75) stayed in negative territory throughout the day, touching a session low of 1,687.11 within the first hour of trading. By the close, the index shed 6.9 points, or 0.4%. Meanwhile, the Nasdaq Composite (COMP - 3,781.59) declined 5.8 points, or 0.2%. On a weekly basis, the SPX closed 1.1% lower -- snapping a three-week winning streak -- while the Nasdaq edged 0.2% higher.

Elsewhere, the CBOE Market Volatility Index (VIX - 15.46) sang a different tune, climbing higher right out of the gate. The "fear gauge" advanced 1.4 points, or 10%, on the day. Week-over-week, the VIX gained 17.8%, and closed above its 20-week moving average for the first Friday in three.

CLOSING SUMMARY - INDICES

CLOSING SUMMARY - NYSE AND NASDAQ

A Trader's Take :

"Next week could be full of fireworks," Detrick noted. "If the government shuts down, it isn't the end of the world, as it has happened before. One thing to remember is that government data could be put on hold or won't be as accurate. Given the fact that everyone is so focused on data, with the Fed closely scrutinizing all the numbers, things could get very interesting, as uncertainty crops up everywhere."

3 Things to Know About Today's Market :

  • The Senate passed its stopgap spending bill today, in an effort to avoid a potential government shutdown. However, the approved bill -- which would be in effect through mid-November -- drew criticism from House Republicans, as it omitted a provision that would strip funds away from Obamacare. Nevertheless, conservatives in the Senate aren't giving up without a fight. "This vote is not the end. It's not even the beginning of the end," stated Sen. Mike Lee (R-Utah). The vote to eliminate the defunding language was tallied at 54 to 44. (USA Today)
  • Yet another Fed official offered his opinion on the continued tapering drama . This time it was Chicago Fed President Charles Evans, who opined that the central bank may not decide to reduce its bond-buying program until early next year. Evans, a voting member of the Federal Open Market Committee (FOMC), noted during a speech in Oslo that while the Fed's decision not to taper was "a close call," it was "very much in keeping with [the central bank's] overall intention in the program that it's open-ended." (MarketWatch)
  • The final September reading for the Thomson Reuters/University of Michigan's consumer sentiment index arrived at 77.5, up from the preliminary figure of 76.8. However, the latest reading denotes a drop from August's figure of 82.1, and marked the index's lowest final reading since April. Economists, on average, were expecting a final figure of 78.0. "While few consumers expected a federal shutdown, complaints about government policies have risen, and more importantly, prospects for job growth have diminished," noted survey director Richard Curtin. (CNBC)

5 Stocks We Were Watching Today :

  1. Nike's ( NKE ) stronger-than-expected quarterly earnings report triggered a slew of bullish brokerage notes this morning.
  2. Option bulls flocked toward eBay ( EBAY ) following news that its PayPal unit acquired Braintree Payment Solutions.
  3. Just one week after being ousted from the Dow, Bank of America (BAC) received some bearish analyst attention.
  4. Put buyers targeted Sirius XM Radio (SIRI) , and wagered on a longer-term decline for the satellite radio darling.
  5. Intel's (INTC) poor price action sparked an influx of short-term option volume, with a focus on December puts.

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 edged lower today, as worries over a potential government shutdown weighed on black gold prices. By the time the dust settled, November-dated oil shaved off 16 cents, or 0.2%, to end at $102.87 per barrel. For the week, crude shed 1.8%.

Conversely, gold futures finished higher, thanks to Chicago Fed President Charles Evans' suggestion that the central bank could hold off tapering until early 2014. Gold for December delivery added $15.10, or 1.1%, to close at $1,339.20 an ounce. On a weekly basis, the malleable metal climbed 0.5%.

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: AAPL , CSCO , EBAY , GILD , NKE

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