Stocks fell on Monday as investors watched the clock tick down to the deadline for raising the debt ceiling with no hope of a resolution.
Stocks fell back into the red on Monday as investors began to realize that there is only one week left for the fools in Washington to raise the debt ceiling before the nation defaults. Although the deadlock comes as no surprise to many investors, Friday’s trading action demonstrated that an enormous number of traders and investors were clinging to hopes of a quick agreement. As time drags on, stocks continue to sink. The Chicago Board Options Exchange Volatility Index (VIX) jumped 15.95 percent to 19.41 – its highest level since June 24.
The Dow Jones Industrial Average (DIA) lost 136 points to finish Monday’s trading session at 14,936 for a 0.90 percent decline. The S&P 500 (SPY) fell 0.85 percent to close at 1,676.
The Nasdaq 100 (QQQ) dropped 0.83 percent to finish at 3,215. The Russell 2000 (IWM) sank 1.16 percent to close at 1,065.
In other major markets, oil (USO) fell 0.48 percent to close at $37.13.
On London’s ICE Futures Europe Exchange, December futures for Brent crude oil advanced 13 cents (0.12 percent) to $108.67/bbl. (BNO).
December gold futures rose $12.40 (0.95 percent) to $1,322.30 per ounce (GLD).
Transports jackknifed on Monday, with the Dow Jones Transportation Average (IYT) falling 1.08 percent.
America’s government shutdown continued to crush Japan’s stock market on Monday, as the weakened dollar has brought unwanted yen strength. The yen strengthened to 97.05 per dollar during Monday’s trading session in Tokyo. A stronger yen causes Japanese exports to be less competitively priced in foreign markets (FXY). Toyota’s share price in Tokyo sank 1.46 percent and Sharp dropped 8.20 percent. The Nikkei 225 Stock Average sank 1.22 percent to 13,853 (EWJ).
In China, the Shanghai Stock Exchange remained closed on Monday as it was the last day of the National “Day” festival week (FXI). Stocks retreated on the Hong Kong Stock Exchange as coal mining stocks sank. A report from the Xinhua news agency disclosed that China will replace four coal-burning plants with natural gas-powered equipment. Hong Kong’s Hang Seng Index fell 0.71 percent to end the session at 21,973 (EWH).
In Europe, stocks retreated following reports that the European Union has joined with Switzerland’s Financial Market Supervisory Authority (FINMA) in the investigation of manipulation of the foreign currency exchange (forex) market (VGK).
The Euro STOXX 50 Index finished Monday’s session with a 0.18 percent decline to 2,923 – remaining well above its 50-day moving average of 2,839. Its Relative Strength Index is 59.23 (FEZ).
Technical indicators revealed that the S&P 500 dropped back below its 50-day moving average of 1,679 after finishing Monday’s session with a 0.85 percent fall to 1,676. Its Relative Strength Index droppd from 51.94 to 46.06. Although the MACD is above the zero line, it continues to sink below the signal line, suggesting the likelihood of a continued retreat.
For Monday, all sectors finished solidly in negative territory. The consumer discretionary sector took the hardest hit, falling 1.45 percent.
Consumer Discretionary (XLY): -1.41%
Technology: (XLK): -0.44%
Industrials (XLI): -0.69%
Materials: (XLB): -1.22%
Energy (XLE): -0.82%
Financials: (XLF): -1.15%
Utilities (XLU): -0.48%
Health Care: (XLV): -1.11%
Consumer Staples (XLP): -0.33%
Bottom line: Increasing concern that no deal will be reached to raise the debt ceiling in time to avoid a sovereign default sent stock prices lower on Monday, leading many to fear that this may just be the onset of a more significant sell-off.
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