Stocks ended in negative territory on Thursday as the U.S government entered its third day of a partial shutdown. Benchmarks traded lower throughout the day but briefly extended losses after a shooting incident took place outside the U.S Capitol. Meanwhile, the number of Americans filing for unemployment benefits increased marginally. Another report released on the home front which was even more disappointing. Growth in the services sector cooled off in September after touching an eight-year high in August. On the international front, China’s official services purchasing manager's index climbed to a six-month high. All ten sectors of the S&P 500 industry groups ended in the red, led by utilities and industrials.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street
The Dow Jones Industrial Average (DJI) lost 0.9% to close the day at 14996.48. The S&P 500 declined 0.9% to finish yesterday’s trading session at 1678.66. The tech-laden Nasdaq Composite Index fell 1.1% to end at 3774.34. The fear-gauge CBOE Volatility Index (VIX) jumped 6.5% to settle at 17.67. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.1 billion shares, lower than 2013’s average of 6.3 billion shares. Declining stocks outnumbered the advancers. For 77% shares that declined, only 21% advanced.
Markets opened lower yesterday and remained in negative territory throughout the day. But stocks extended losses after shots were fired outside the Capitol. The incident began in the afternoon after a lady in a black Infiniti sedan tried to enter the gates of the White House. She was chased by police and shots were exchanged near the Capitol. Ultimately, she was shot dead by the police. The incident happened when the House and the Senate were in session.
Lawmakers are still struggling to resolve the ongoing budget issue. The Dow declined nearly 180 points after President Barack Obama said he would not meet Republicans’ demands in return for renewing government operations. In an effort to resolve the issue Obama met Republicans and Democrats in Congress late Wednesday. After declining nearly 180 points, the Dow trimmed losses after The New York Times reported that House Speaker John Boehner told colleagues he is committed to avoid a situation where the United States defaults on its debt.
On the home front, the U.S. Department of Labor reported initial claims numbers. According to the report, initial claims increased 1,000 to 308,000 from the previous week’s revised figure of 307,000. This was below the consensus estimate of 319,000. The four week moving average decreased 3,750 to 305,000 from the prior week’s revised of 308,750.
Meanwhile, the Institute for Supply Management said service sector growth declined in September. According to the report, the services index fell to 54.4 in September from August’s figure of 58.6. `This was considerably below the consensus estimate of a decline to 57.8. The Non-Manufacturing Business Activity Index decreased to 55.1 from 62.2. The New Orders Index and the Employment Index declined to 59.6 and 52.7 respectively. Due to the partial government shutdown, factory orders data was not released yesterday.
On the international front, China’s service sector index increased to a six-month high due to higher demand. The National Bureau of Statistics said the official services purchasing manager's index climbed to 55.4 in September from 53.9 in August.
Utilities sector was the biggest loser among the S&P 500 industry groups and the Utilities SPDR (XLU) lost 1.2%. Stocks such as Public Service Enterprise Group Inc. (NYSE:PEG), Exelon Corporation (NYSE:EXC), PG&E Corporation (NYSE:PCG), Consolidated Edison, Inc. (NYSE:ED) and Edison International (NYSE:EIX) slipped 1.4%, 1.8%, 1.7%, 1.0% and 0.7%, respectively.