Stocks Mount Comeback but Fall on Budget Impasse
It looked like a bad day on Wall Street when U.S. markets opened down nearly 1%, but a rally throughout the day has pulled stocks close to breakeven. By 3:15 p.m. EDT the Dow Jones Industrial Average was down just 0.56%, while the S&P 500 was only off by 0.29%.
Of course, the showdown in Washington was the focus this morning, but fears eased a little when President Barack Obama invited congressional leaders to the White House tonight to discuss the budget and debt-ceiling debates. Don't expect a resolution soon, but getting closer to a solution is a positive for everyone. The government shutdown is less than two days old, and unless talks make progress, we could be in for weeks of closed services.
One of the companies affected by the government shutdown is United Technologies , which is down 2.5% today. Government-hired civilian inspectors examine the company's Black Hawk helicopters during manufacturing, which was forced to halt when the personnel were sent home. Having productive assets sitting idle is a cash-burn for United Technologies, and with a congressional solution still far in the distance, it's possible this will have a meaningful impact on the company's third-quarter results.
The other big mover today is Microsoft , up 1% because some of the company's largest shareholders are pushing for co-founder Bill Gates to step down as chairman of the board. CEO Steve Ballmer is on his way out, and if Gates left, then the old guard of Microsoft would be almost completely gone. That might not be a bad thing, given the changes the tech industry has gone through and the fact that Microsoft missed out on the transition to mobile devices. Still, investors' reaction today is probably overdone.
Gates was the brain trust behind Microsoft's rise to dominance in PCs, and he might already be eyeing the door. Gates regularly sells Microsoft stock, and by 2018 he will completely sell his shares, so he may step down by then anyway. Investors simply appear to be cheering the thought of new leadership at Microsoft, but finding a new CEO is a bigger concern than Gates' role as chairman.
Can a new CEO lead Microsoft to the promised land?
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The article Stocks Mount Comeback but Fall on Budget Impasse originally appeared on Fool.com.
Fool contributor Travis Hoium manages an account that owns shares of Microsoft. The Motley Fool owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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