While you were sleeping Wall Street, Black Hawk down

Friday 4th October 2013

Wall Street declined on concern about the lack of progress in solving the political stalemate over a US budget agreement that has closed all non-essential government services and risks grinding the recovery in the world's largest economy to a halt.

"We've heard speech after speech, and the only thing that we continue to hear is that nothing's going to get done," Sam Ginzburg, head of trading at First New York Securities, told Reuters.

Even so, Ginzburg remains optimistic. "I think ultimately it will."

Shares of United Technologies fell, last 1.4 percent weaker, after the company said it might have to furlough more than 5,000 workers if the government shutdown continues into next month.

It said it expects to furlough the first workers, nearly 2,000 people, at its Sikorsky Aircraft unit, which makes the Black Hawk helicopters, on October 7.

In afternoon trading in New York, the Dow Jones Industrial Average retreated 0.68 percent, the Standard & Poor's 500 Index dropped 0.66 percent, and the Nasdaq Composite Index sank 0.86 percent.

Shares of Boeing and Chevron fell, last down 1.9 percent and 1.8 percent respectively, pacing losses in the Dow.

"I think the longer this stalemate goes on in Washington, the greater the reaction is going to be in the market," Warren West, principal at Greentree Brokerage Services in Philadelphia, told Reuters.

Initial claims for state unemployment benefits rose by 1,000 to a seasonally adjusted 308,000 in the week ended September 28, according to the Labor Department.

Separately, the Institute for Supply Management said its services index fell to a lower-than-anticipated 54.4 in September, the lowest in three months.

"We're still seeing positive growth, it's just not suggesting that there's underlying momentum in the pipeline to propel us beyond the 2 percent growth range," Lindsey Piegza, chief economist at Sterne Agee & Lynch in Chicago, told Bloomberg News. "Businesses are very hesitant to invest in additional employees."

Meanwhile, the Labor Department said it will not release the September payrolls data-which includes the unemployment rate and payroll employment-on Friday as originally scheduled because of the lapse in funding. An alternative release date has not been scheduled, it said in a statement on its website.

Shares of Eli Lilly slumped, last down 3.1 percent, after the company said it will be "challenging" to meet its minimum revenue goal in 2014 because of the devaluation of the Japanese yen and slower market growth in key emerging market countries.

In Europe, the Stoxx 600 Index finished the session 0.4 percent weaker from the previous close. Germany's DAX fell 0.4 percent, while France's CAC 40 slid 0.7 percent. The UK's FTSE 100 gained 0.2 percent.

BusinessDesk.co.nz

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