Stocks drop on Wal-Mart, Washington fears

Stocks fell on Wall Street for a fifth straight day Wednesday. Worries about the economy and a report that Wal-Mart is cutting orders with suppliers weighed on stocks.

|
Richard Drew/AP
Trader Robert McQuade works on the floor of the New York Stock Exchange Wednesday. Continued worries about the economy and the growing possibility of a government shutdown pushed stocks down.

Wal-Mart spooked the stock market Wednesday — helping push stocks lower for a fifth straight day.

The Dow Jones industrial average fell 61.33 points, or 0.4 percent, 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," 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, or 1.5 percent, to $74.65, taking the rest of the market with it.

The Standard & Poor's 500 index fell five points, or 0.3 percent, to 1,692.77. Its five-day losing streak is the longest this year.

The Nasdaq composite lost seven points, or 0.2 percent, 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 that a government shutdown could harm the fragile U.S. economic recovery.

Two financial deadlines for the U.S. government loom. Congress needs to pass a funding bill to keep the government operating after Oct. 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 Oct. 17, Treasury Secretary Jacob Lew told Congress in a letter Wednesday.

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 in assets.

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 U.S.

Although the U.S. and Europe are in better shape two years later, there are concerns about real damage to the economy if the budget battle turns ugly. U.S. 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-defense-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," Ablin said.

Wall Street is also looking to next Friday, Oct. 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.

At the end of its last meeting on Sept. 18, traders had expected a small cut in the Fed's $85 billion monthly bond purchases, which are aimed at keeping long-term interest rates low to encourage borrowing. When the Fed kept its bond-buying intact, the Dow and S&P 500 index soared to all-time highs. Wall Street celebrated that the central bank would keep borrowing rates as low as possible.

But the Fed's decision also left traders worried that the economy wasn't healthy enough to grow without the Fed's help.

Investors did get an unexpectedly positive August durable goods report on Wednesday. Orders for long-lasting manufactured goods rose 0.1 percent last month, following an 8.1 percent decline in July.

Among stocks making big moves:

JC Penney fell $1.78, or 15 percent, to $10.12, as more Wall Street analysts continued to downgrade the department store chain's outlook. An analyst at JPMorgan Chase said JC Penney might right out of cash by next year.

Mako Surgical soared $13.29, or 82 percent, to $29.46 after medical technology company Stryker said it would buy Mako for $1.65 billion, or $30 per share.

Ascena Retail Group shares jumped $2.74, or 16 percent, to $20.06. The parent company of Lane Bryant, Dressbarn and Maurices, reported results that were significantly better than financial analysts expected in its most recent quarter.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Stocks drop on Wal-Mart, Washington fears
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2013/0925/Stocks-drop-on-Wal-Mart-Washington-fears
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe