Slump in U.S. stocks continues
Wal-Mart spooked the US stock market today - helping push stocks lower for a fifth straight day.
The Dow Jones industrial average fell 61.33 points, or 0.4%, to 15,273.26. The Dow was dragged down by Wal-Mart after Bloomberg News reported that the world's biggest retailer is cutting orders with suppliers as unsold merchandise piles up.
Wal-Mart spokesman Dave Tovar said the report was misleading and that in some categories, the discounter was ordering more, and in other areas it was ordering less.
"This is business as usual," Mr Tovar said, noting that it was part of an ongoing process of managing the seasonality of the business based on consumer demand.
Wal-Mart fell 1.10 US dollars, or 1.5%, to 74.65 US dollars, taking the rest of the market with it.
The Standard & Poor's 500 index fell five points, or 0.3%, to 1,692.77. Its five-day losing streak is the longest this year.
The Nasdaq composite lost seven points, or 0.2%, to 3,761.10.
Worries about the economy and the growing possibility of a government shutdown also continue to weigh on investors' minds. In just a week, the mood of investors has shifted from giddiness over more Federal Reserve stimulus to concern that a government shutdown could harm the fragile US economic recovery.
Two financial deadlines for the US government loom. Congress needs to pass a funding bill to keep the government operating after October 1, when the Federal government's new fiscal year starts. There is also the issue of the nation's debt ceiling, which needs to be raised before October 17, Treasury Secretary Jacob Lew told Congress in a letter today.
The Republican-controlled House of Representatives has passed a temporary spending bill and a vote in the Democrat-controlled Senate is expected later this week. However, a conflict between the two parties over funding the Affordable Care Act, also known as Obamacare, has yet to be resolved. Both chambers of Congress have yet to address the issue of the debt ceiling.
"The action over the last few days has been far more tied to the intractably of Congress and the president than the concerns about what the Federal Reserve is going to do next," said Jack Ablin, chief investment officer at BMO Private Bank, which manages 66 billion US dollars in assets.
Mr Ablin said investors have bad memories from August 2011, the last time Congress and President Barack Obama fought over the debt ceiling and the budget, which ultimately led Standard & Poor's to downgrade the credit rating of the US.
Although the US and Europe are in better shape two years later, there are concerns about real damage to the economy if the budget battle turns ugly. US economic growth slowed considerably in the third quarter of 2011, the same quarter as the downgrade. The slowdown was caused partly by a drop in non-defence-related spending.
The Dow went through nearly three weeks of triple-digit gains and losses during that month, a rough ride that made even hardened Wall Street traders nauseous.
"All we're doing now is worrying," Mr Ablin said.
Wall Street is also looking to next Friday, October 4, when investors get the September jobs report. If hiring is strong enough, the Federal Reserve could decide to start pulling back on its economic stimulus at a two-day policy meeting later in the month.