Deadlock, durables, dismal earnings hit Wall Street


Wall Street suffered its worst day in eight weeks on Wednesday, hit by weak earnings, lackluster economic data and no movement in Washington talks as the deadline for a default looms.

The debt ceiling debate has grabbed much of investors’ attention this week as the August 2 deadline approaches, but it took a back seat for much of the day as the market reacted to earnings disappointments in industrial and technology sectors.

A profit warning from Juniper Networks sent its shares down 20.9 percent to $24.66, damaging sentiment in the technology sector, which has been among the strongest this reporting period. The S&P tech index <.GSPT> declined 3 percent.

A late statement from White House that the government would be “running on fumes” if the debt ceiling isn’t increased by the deadline added to selling.

The S&P 500 <.SPX> has lost more than 2 percent so far this week as acrimonious debate about cutting spending and raising the debt limit left investors fretting over a debt default or possible credit downgrade.

“We haven’t been committing new capital. We’ve been holding off on making any purchases over the last few days,” said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago. “If you multiply us by the other 10,000 money managers, you get a sense of why the market is getting a little soft.”

Volume increased as the selling extended, a sign of weak conviction among investors. More than 10 stocks fell for every one that rose on the NYSE.

New orders for long-lasting U.S. manufactured goods fell unexpectedly in June, and a gauge of business spending plans slipped.

Moderating order growth at Emerson Electric Co added to worries about earnings among industrial stocks. Emerson shares fell 6.7 percent to $50.43.

The CBOE Volatility Index <.VIX> rose 13.4 percent, gaining for a third day as analysts said the index is pricing in the possibility of a U.S. credit downgrade.

loading...
loading...