Dow Dives 159 Points as Debt Deadline Looms
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President Obama took to the podium on Tuesday, speaking for more than an hour about the dangers of a U.S. default. Characterizing House Republicans as beneficiaries of gerrymandered districts more worried about next election's Tea Party opponent than the fate of the country, the president sharply reminded his opponents that America's creditworthiness was nothing to play political games with. Wall Street's interpretation of today's developments saw the Dow Jones Industrial Average fall 159 points, or 1.1%, to end at 14,776, as investors show they believe the two sides to be very far apart.
Wal-Mart stock was able to ignore the political tension of the day, adding 1.4% as the big-box retailer announced an aggressive pricing strategy for the Apple iPhone 5c. Wal-Mart will offer the new model for just $45, less than half Apple's own price point of $99. Wal-Mart will be heavily subsidizing the phone to get foot traffic in its stores for the holiday season, a strategy preceded by Best Buy , which offered the phone for $50 in a weekend sale.
Procter & Gamble shares were also able to resist the bearish pull of markets, ticking up 0.9% on Tuesday. The advance came on an upgrade from Wells Fargo analyst Chris Ferrara, praising the new leadership at the consumer products giant. A.G. Lafley, recently installed as CEO, has nearly a decade's worth of experience in this exact position, having led the company from 2000 to 2009. Procter & Gamble may not double sales in the next year or two, but its cost-cutting initiatives look promising for its bottom line.
Of course, there were plenty of losers in the Dow today, with JPMorgan stock one of the most prominent decliners. Shares were down 1.9% as Wall Street cut its exposure to financials. In a worst-case scenario of a U.S. default, banks face a number of threats, from steep losses in their bond portfolios to a severe slowdown in consumer banking and loan demand.
Lastly, Visa shed 2%, ending at the bottom of the Dow for a second straight day. Not only would a default be devastating to consumer spending, but the credit card industry is already seeing it decline. August was the third straight month that credit card use fell, and with the holiday season nearly upon us, that's not a trend Visa shareholders want to see continue.
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The article Dow Dives 159 Points as Debt Deadline Looms originally appeared on Fool.com.Fool contributor John Divine owns shares of Apple. You can follow him on Twitter @divinebizkid and on Motley Fool CAPS @TMFDivine.The Motley Fool recommends and owns shares of Apple, Visa, and Wells Fargo. It recommends Procter & Gamble and owns shares of JPMorgan Chase. 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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