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U.S. stocks are down on interest rate and government shutdown fears

Published 09/25/2023, 06:56 PM
Updated 09/26/2023, 11:17 AM
© Reuters.

Investing.com -- U.S. stocks were falling on Tuesday, adding to losses for the month as investors worried about interest rates staying higher for longer and about the potential effects of a government shutdown.

At 11:13 ET (15:13 GMT), the Dow Jones Industrial Average fell 276 points or 0.8%, while the S&P 500 was down 1.1% and the NASDAQ Composite was down 1.2%.

Indices set for losing month on hawkish Fed

The main indices on Wall Street are still feeling reflecting investor reaction to last week’s surprisingly hawkish Federal Reserve meeting, with the policymakers signaling another rate increase this year and just two rate cuts next year, down from the four forecast at the June meeting. Officials sent the message that they believed interest rates would have to stay higher for longer to cool inflation toward their 2% target rate.

Minneapolis Federal Reserve Bank President Neel Kashkari emphasized the point on Monday, staying that given the surprising resilience of the U.S. economy, the Fed probably needs to raise borrowing rates further and keep them high for some time to bring inflation back down to 2%.

On Monday, the benchmark S&P 500, tech-heavy Nasdaq Composite, and 30-stock Dow Jones Industrial Average climbed, snapping four-day losing streaks. 

But all of the indices are still on course to finish September sharply in the red, with the tech-heavy Nasdaq Composite down 5.4% in September, heading for its worst month since December, while the S&P 500 and Dow Jones Industrial Average had lost 3.8% and 2.1%, respectively. 

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Moody’s warns about shutdown damage

Also weighing on sentiment is the uncertainty surrounding a potential federal government shutdown, an occurrence that would harm the country's credit, rating agency Moody's (NYSE:MCO) Investors Service said on Monday. Lawmakers on Capitol Hill are trying to hammer out an agreement at least on a temporary funding measure that would buy them more time, but Saturday's deadline is quickly approaching.

The warning by Moody's comes just a month after Fitch downgraded the U.S. by one notch on the back of a debt ceiling crisis, meaning Moody’s is the last of the major agencies to still maintain the U.S. with the premier triple ‘A’ rating.

The yield on 10-year Treasury notes rose as high as 4.566%, a 16-year peak, pushing the U.S. dollar to a 10-month peak.

August new home sales came in at 675,000, lower than expected. The September consumer confidence at 103, was also lower than expected.

Alibaba to list logistics unit in Hong Kong

In corporate news, earnings are due from warehouse retailer Costco (NASDAQ:COST) after the closing bell. Whole Foods distributor United Natural Foods (NYSE:UNFI) beat profit expectations and reported revenue in-line with forecasts. Shares fell 21%.

Additionally, Alibaba (NYSE:BABA) is set to list its logistics unit Cainiao on the Hong Kong Stock Exchange, the Chinese e-commerce giant said in a regulatory filing on Tuesday.

Alibaba will continue to hold more than 50% of the shares of Cainiao after the spinoff.

Crude rebounds from losing week 

Oil prices fell Tuesday as renewed stress in China’s property market raised concerns about economic growth this year in the world’s largest crude importer.

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Embattled developer China Evergrande (HK:3333) Group warned earlier this week that it was unable to issue new debt, putting the focus firmly on the release of key Chinese purchasing managers’ index data for September later in the week.

(Oliver Gray contributed to this item.)

 

Latest comments

Build Back Broker is more like America now. It's not better, they have it all wrong. We're going to have to pay on this deficit someday and it's not going to be pleasant, folks. Wake Up!!
Gary Gensler - this man's purpose in life is to make everyone else's life miserable. Hey Gary, you're 65 now why don't you just retire and get the hell out!
another great day of building back better thanks Democrats
you m(orons) complain when markets go up, and you complain when markets go down...
The problem is that the Fed is starting to sound like a lame parent that keeps threatening to be strict but then caves.
You know what never fails? Looking at the balance of a high yield savings account. It only goes higher!... every single day!...it never goes lower, never, ever!  That kind of smart money does not leave its safe place to enter a stock market that is hovering near all-time double topping highs....... and, especially not while the Fed keeps threatening to jack up interest rates even further after their next intended rate hike.
usaentersstagflation.oilwillhit150forcingthefedtotightenanother200bpsataminimum
Cant see why so many blaming Biden for the macro vector that took it start in 2008 crisis resolution. No matter already what current administration is doing (or not doing) at all.Ponzi will burst.
Because anybody who has not had their brain turned to mush and has been alive for the past 7 years knows that their life was much better under Trump, and it was just a bunch of democrats complaining because they did not like that Queen Hillary lost and could not start WW3. Biden got into office and immediately started laundering hundreds of billions through a proxy war in Ukraine.
don't mind them alex, they are either clueless minions or degenerate t(rolls)...
...with bots upticking whatever drivel they post, and downticking anyone pointing out their bs and nonsense, like you..
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shutdown is unavailable
Look at the Start button
"US new home sales tumble in August" "US annual home price growth accelerates in July"....Bidenomics.
Team Biden wants a rental economy, including your health.
Now you know why they are sending out "free" COVID test kids, Biden needs to hide in the basement again so they need the election year variant numbers to go up...
Thanks to Bidenomics, the top two sellers in Amazon grocery section are ramen noodles...
Gentlemen, the economy is in a very precarious state. the consumer is essentially spent out, having raised credit card debt to just north of 1 billion dollars. though historically speaking interest rates are in a normal rate. but, because the markets are so levered up,along with declining sales many companies are facing bankruptcy. which, by the way are up 68% year over year. the economic policies of this administration are truly a joke!
"the economic policies of this administration are truly a joke!"  - hmmmm, what exactly are wrong with Biden's economic policies?  dont' be shy, tell us
You are correct. There is no answer to Bidens' economic policy question. So much so that Biden doesn't even know his own economic policy. The senile old man can barely find his way to the bathroom, let alone implement an economic policy. People really should be blaming the puppet masters in the administration since Biden is CLEARLY not in control.
it's 1 trillion
"French shoppers buy fewer tampons, less detergent as prices surge". When money gets tight, all the trans women magically stop needing tampons...
Trans people living in your head rent free
We have plenty of jobs and the consumer spending is still quite robust. Thank you Sir Biden!
Bidenomics really helping out americans huh!
Powell and Biden are laughing at the corner.
who appointed Powell to be the Fed Chairman?
Barrack
By the way, whatever banks made comment on “we are in recession”, those people should get prosecuted, made false statment effect market is pure act of market manipulation
On interest rate? Did it get raise yet? So now acting on behalf of something has not happened and probably will not happen? These media keep putting out bull 💩stories
Cut interest rates in 2024 just because it's an election year. That way, inflation will accelerate and be a problem for whoever replaces Joe.
hi
I hope they shut this communist us govt down till 25
U still have to pay taxes
Bill, another commenter with no grasp of reality.
That would sure create the unemployment and deflation that the Fed wants. Then the printer goes Brrrrr and all you perma bulls can be right for once.
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