Here’s Why Market Bearishness Is Growing
Stocks slid further on Wednesday as the budget deadline approached, with no light at the end of the tunnel.
Stocks extended their losing streak to a fifth day as the budget battle on Capitol Hill continued. Beyond that, Treasury Secretary Jacob Lew reminded Congress that we will hit the debt ceiling on October 17. The bearishness inspired by the dysfunction in Washington combined with bad news from Wal-Mart (NYSE:WMT) to put investors in a risk-averse mood, sending stock prices lower. After Wal-Mart notified its suppliers that an ever-increasing pile of inventory was exceeding its warehouse capacity, the company’s stock price sank 1.45 percent. The news raised concerns among investors about the outlook for consumer spending as well as the upcoming Christmas shopping season.
The report on New Home Sales during August from the Commerce Department’s Census Bureau turned out to be another disappointment. Although the report indicated that the sale of new homes increased to a seasonally-adjusted annual rate of 421,000 from July’s SAAR of 390,000 the result fell short of economists’ expectations for a SAAR of 425,000.
Despite the disappointment, the SPDR S&P Homebuilders ETF (NYSEARCA:XHB) finished the day with a 0.13 percent advance. The Dow Jones Industrial Average (NYSEARCA:DIA) lost 61 points to finish Wednesday’s trading session at 15,273 for a 0.40 percent decline. The S&P 500 (NYSEARCA:SPY) fell 0.27 percent to close at 1,692. The Nasdaq 100 (NASDAQ:QQQ) declined 0.31 percent to finish at 3,208. The Russell 2000 (NYSEARCA:IWM) dipped 0.11 percent to end the day at 1,073 despite reaching a new, record intraday high of 1,082.00.
In other major markets, oil (NYSEARCA:USO) sank 0.91 percent to close at $36.88. On London’s ICE Futures Europe Exchange, November futures for Brent crude oil declined 77 cents (0.71 percent) to $107.00/bbl. (NYSEARCA:BNO). December gold futures rose $17.10 (1.30 percent) to $1,333.40 per ounce (NYSEARCA:GLD). Transports got stuck in traffic again on Wednesday, with the Dow Jones Transportation Average (NYSEARCA:IYT) declining 0.61 percent.