Budget Worries Lead To Continued Weakness On Wall Street - U.S. Commentary

(RTTNews) - While selling pressure remained relatively subdued, stocks moved modestly lower over the course of the trading day on Wednesday. The markets experienced another choppy session but still extended the downward trend seen over the past week.

The major averages all ended the day in the red, with the Dow and the S&P 500 closing lower for the fifth straight day. The Dow fell 61.33 points or 0.4 percent to 15,273.26, the Nasdaq edged down 7.16 points or 0.2 percent to 3,761.10 and the S&P 500 dipped 4.65 points or 0.3 percent to 1,692.77.

The modest weakness on Wall Street was partly attributed to lingering concerns about the possibility of a government shutdown at the end of the month.

While the Senate unanimously voted to begin debate on the House-passed bill that temporarily funds the government but cuts off funding for President Obama's healthcare reform law, Democrats are expected to strip the language defunding Obamacare before sending the bill back to the House.

The Republican leadership would then have to decide whether to bring the Senate bill up for a vote or risk a government shutdown.

If lawmakers manage to overcome the impasse over funding for Obamacare and keep the government running past next Monday, the issue of the debt limit is likely to quickly take center stage.

Treasury Secretary Jack Lew sent a letter to Congress today warning that the extraordinary measures the Treasury is employing to preserve U.S. borrowing capacity will be exhausted no later than October 17th.

On the economic front, the Commerce Department released its monthly report on durable goods orders before the start of trading.

While the report unexpectedly showed a modest increase in durable goods orders in August, it also showed an unexpected drop in orders when excluding transportation equipment.

Meanwhile, the Commerce Department released a separate report showing that new home sales rebounded roughly in line with estimates in August after hitting a nine-month low in July.

Sector News

Most of the major sectors ended the day showing only modest moves, contributing to the relatively lackluster performance by the broader markets.

Trucking stocks saw considerable weakness, however, with the Dow Jones Trucking Index falling by 1.3 percent. The index continued to give back ground after reaching its best closing level in well over a month last Friday.

Quality Distribution (QLTY), J.B. Hunt (JBHT), and Old Dominion (ODFL) turned in some of the trucking sector's worst performances.

Railroad, retail, and utilities stocks also saw some weakness on the day, although selling pressure was relatively subdued.

Meanwhile, gold stocks showed a substantial move to the upside amid a notable increase by the price of the precious metal. With gold for December delivery climbing $19.90 to $1,336.20 an ounce, the NYSE Arca Gold Bugs Index surged up by 2 percent.

Computer hardware, networking, and banking stocks also turned in strong performances, helping to limit the downside for the markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.8 percent, while China's Shanghai Composite Index ended the day down by 0.4 percent.

Meanwhile, the French CAC 40 Index and the German DAX Index recovered from their mid-day lows to end the day roughly flat, while the U.K.'s FTSE 100 Index dipped by 0.3 percent.

In the bond market, treasuries moved notably higher over the course of the session, extending a recent upward trend. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.9 basis points to a new one-month low of 2.614 percent.

Looking Ahead

Trading on Thursday could be impacted by the release of another batch of U.S. economic data, including reports on weekly jobless claims, pending home sales, and second quarter GDP.