Stocks Fade With Hopes For Sanity In The Capitol

Stocks sank on Tuesday as the four-day “hope rally”, fueled by anticipation that a deal could be reached to end the government shutdown, lost its momentum. As investors braced themselves for a significant batch of earnings reports during the final three days of this week, their patience over the budget/debt ceiling deadlock finally became exhausted.

The Dow Jones Industrial Average (DIA) lost 133 points to finish Tuesday’s trading session at 15,168 for a 0.87 percent decline. The S&P 500 (SPY) fell 0.71 percent to close at 1,698.

The Nasdaq 100 (QQQ) declined 0.35 percent to finish at 3,244. The Russell 2000 (IWM) sank 0.98 percent to end the day at 1,079.
In other major markets, oil (USO) fell 1.08 percent to close at $36.47.

On London’s ICE Futures Europe Exchange, December futures for Brent crude oil declined $1.07 (0.97 percent) to $109.17/bbl. (BNO).

December gold futures rose $3.70 (0.29 percent) to $1,280.30 per ounce (GLD).

Transports were stalled by the government shutdown on Tuesday, with the Dow Jones Transportation Average (IYT) declining 0.15 percent. Welcome to a New Era of (Permanent?) Political Chaos

In Japan, investors did not appear to be bothered by the threat of Typhoon Wipha, nor did they seem concerned about the risk of a sovereign default by the United States. The exchange rate for the yen remained at approximately 98.50 per dollar during Tuesday’s trading session in Tokyo. A weaker yen causes Japanese exports to be more competitively priced in foreign markets (FXY). The Nikkei 225 Stock Average advanced 0.26 percent to 14,441 (EWJ).

In China, a stock market decline was led by the financial sector, after the People’s Bank of China reported that the nation’s expansion of its money supply slowed to 14.2 percent in September. The Shanghai Composite Index declined 0.19 percent to close at 2,233 (FXI). Nevertheless, Hong Kong’s Hang Seng Index advanced 0.51 percent to end the day at 23,336 (EWH).

In Europe, stocks advanced after the ZEW Centre for European Economic Research reported that its Indicator of Economic Sentiment for Germany increased by 3.2 points in October to reach 52.8 – its highest level since April of 2010 (EWG). The respective indicator for the Eurozone increased by 0.5 points to 59.1 (VGK). The Euro STOXX 50 Index finished Tuesday’s session with a 0.90 percent advance to 3,004 – climbing further above its 50-day moving average of 2,859. Its Relative Strength Index is 69.86 (FEZ).

Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,678 after finishing Tuesday’s session with a 0.71 percent decline to 1,698. Its Relative Strength Index fell from 58.72 to 54.09 . The MACD managed to remain slightly above the signal line, suggesting the likelihood of a resumed advance.