The stock markets in the United States suffered another decline amid the government shutdown and due to the weaker-than-expected growth in the service industry. Investors are becoming increasingly concerned that the gridlock in Washington will lead to another recession.
During an exclusive interview with CNBC’s John Harwood; President Barack Obama said Wall Street should worry with the current impasse in Washington. According to him, the situation is different from the normal wrangling of lawmakers in the Congress. He said, “I think this time is different, I think they [Wall Street] should be concerned. When you have a situation in which a faction is willing to default on U.S. government’s obligations, then we are in trouble.”
President Obama also said, “It is important for [Wall Street] to recognize that this is going to have a profound impact on our economy and their bottom lines, their employees and their shareholders.” He added that the American people and businesses are tired of “governing from crisis to crisis.”
On the other hand, International Monetary Fund (IMF) Managing Director, Christine Lagarde, warned that the current government shutdown and failure to raise the debt ceiling of the United States might harm the global economy. According to her, it is critical to resolve the problem as soon as possible. Business leaders and policy makers are worried that lawmakers will not be able to reach a deal to raise the borrowing limit of the government before the deadline on October 17.
President Obama said the problem can only be resolved if Republican House Speaker John Boehner would put forward a vote on a stopgap spending bill without conditions.
In an interview with Bloomberg, Joseph Saluzzi, partner and co-head of Themis Trading LLC said, “I think people are starting to raise an eyebrow finally. The longer this goes on; people get a little more nervous. And when people get nervous they sell first and ask questions later.”
- Dow Jones Industrial Average (DJIA)- 14,996.48 (-0.90%)
- S&P 500- 1,678.66 (-0.90%)
- NASDAQ- 3,774.34 (-1.07%)
- Russell 2000- 1,072.86 (-0.90%)
- EURO STOXX 50 Price EUR- 2, 902.12 (-0.55%)
- FTSE 100 Index- 6,449.04 (+0.18%)
- Deutsche Borse AG German Stock Index DAX- 8,597.91 (-0.37%)
Asia Pacific Markets
- Nikkei 225- 14, 157.25 (-0.09%)
- Hong Kong Hang Seng Index- 23,214.40 (+1.00%)
- Shanghai Shenzhen CSI 300 Index- 2, 409.04 (+0.59%)
Stocks In Focus
The stock price of Eli Lilly & Co. (NYSE:LLY) declined by more than 3% to as low as $48.50 after the company warned that it might not be able to meet its target revenue for 2014 because of the slowdown in emerging markets, and the weakening of the Yen currency. Despite the warning, the drug maker maintained its objective to generate $3 billion net income, $4 billion operating cash flow, and at least $20 billion revenue. The company plans to buy back shares worth $5 billion over time and to maintain its dividend.
PVH Corp (NYSE:PVH), the manufacturer of Calvin Klein and Tommy Hilfiger clothing brands, gained over 4% to as much as $125.79 per share after the company announced the sale of its G.H. Bass and Co. business unit for $50 million in cash to G-III Apparel Group Ltd. The company also increased its earnings outlook for the third quarter to around $2.25 per share from $2.20 per share.
The stock value of Zale Corporation (NYSE:ZLC) plunged to as low as $13.70 per share after the jewelry retailer filed a regulatory filing with the Securities and Exchange Commission (SEC) to sell 11 million shares related to warrants issued to Z investment Holdings in 2010. According to a report from The Wall Street Journal, Golden Gate Capital, a private equity firm has the right to acquire the stocks for $2 a share. The stock ended the trading session at $14.62 per share, down by over 7%.
Meanwhile, United Technologies Corporation (NYSE:UTX) declined by 1.23% to $103.69 per share after the military contractor said it might lay off approximately 5,000 employees due to the ongoing government shutdown. The company said its first batch of layoff would be 2,000 Sikorsky Aircraft workers in Alabama, Connecticut, and Florida on October 7.