Closing Bell: Stocks Slump on Fears of a Drawn-Out Budget Battle

DailyFinance Staff
Updated
new york stock exchange traders shares fall budget battle
John Moore/Getty Images

Stocks fell Friday as investors become skittish about the possibility of a drawn-out battle in Washington over raising the nation's debt ceiling.

The Dow Jones industrial average (^DJI) slumped 185 points, or 1.2 percent, to 15,451, the Standard & Poor's 500 index (^GPSC) lost 12 points, or 0.7 percent, to 1,710 and the Nasdaq composite index (^IXIC) dropped 14 points, or 0.4 percent, to 3,775.

The nation's debt ceiling must be raised by Oct. 1 to avoid a government shutdown, and a potential default on its payments, including debt, later in the month. The House of Representatives signaled that a debt deal wasn't likely after members voted to defund President Barack Obama's health care law, all of which reminded investors that the next few weeks are likely to bring a lot of uncertainty, which Wall Street hates.

Federal Reserve officials were out in force Friday, talking about the economy and the Fed's surprise decision Wednesday to delay scaling back its $85 billion in monthly bond buys.

St. Louis Federal Reserve Bank President James Bullard, interviewed by Bloomberg TV, said a reduction of the Fed's $85 billion monthly bond purchase program beginning in October was possible. Bullard also said in a speech in New York later that low inflation meant the Fed can be patient in deciding when to scale back its pace of asset purchases.

Sponsored Links



Kansas City Federal Reserve Bank President Esther George told the Shadow Open Market Committee in New York that the central bank needs to move away from the bond-buying policy and called the decision not to taper disappointing.

In commodities news, The price for a barrel of benchmark crude fell 18 cents to $106.21 thanks to the appearance of progress with Syria, while gold dropped $36.80, or 3 percent, to $1,332.50 an ounce.

In corporate news, BlackBerry (BBRY) said it's taking a $1 billion charge on its unsold inventory of Z10 smartphones and will lay off 4,500 employees, or 40 percent of global workforce, leaving it with 7,000 full-time global employees.

Darden Restaurants (DRI), the struggling parent of Olive Garden and Red Lobster, fell 7.1 percent to $45.78 after posting a much lower quarterly profit and saying its president and chief operating officer will retire. Sales fell at its two flagship restaurant chains despite efforts to renew menus and advertising.

Target (TGT) plans to hire about 70,000 seasonal workers for the holiday shopping season, down about 20 percent from a year ago. The retailer is aiming to be more efficient in its hiring practice. Target said it also wants to respond more quickly to the peaks and valleys of customer traffic, which have become more pronounced for many stores as shoppers time their buying for when they believe they can get the best deals.

More Stocks in the News:

  • Shares of Apple (AAPL) dipped 1 percent to $467.41 as the company's latest version of its iPhone product line hit stores around the world.

  • Goodyear Tire & Rubber (GT) reinstated its dividend after a hiatus of more than a decade. The Akron, Ohio-based company also said it would buy back up to $100 million of its shares. But it didn't impress the market. Goodyear dipped 2 cents to $22.22.

  • Shares of real estate website Zillow (Z) fell as much as 10 percent after short-seller Citron Research questioned its business model for the second time in a year and noted that senior executives have been selling the stock. Shares ended the day at $92.02, down 6.4 percent.

  • Kroger (KR) said that David Dillon, the grocery store's CEO for a decade, plans to step down from that job in January and that President and Chief Operating Officer Rodney McMullen will replace him as CEO. Kroger shares fell 0.6 percent to $40.77.

  • Sprint (S) has joined its three biggest rivals in offering an early upgrade option for smartphones and promised cheaper fees than its competitors charge. But shares in Sprint, the No. 3 U.S. cellular provider, fell 3.5 percent to $6.26 on concern about its financial outlook, which could be hurt by the service discount, analysts said.

  • Two new stocks nearly doubled after their initial public offerings. Tech security company FireEye (FEYE) jumped 80 percent to $36.00 in its debut, and artificial intelligence company Rocket Fuel (FUEL) rose 93.5 percent to $56.10.

What to Watch Monday:

  • Markit Economics releases its initial September survey of purchasing manager activity in the manufacturing sector at 9 a.m. Eastern time.

  • At 9:20 a.m., Atlanta Federal Reserve Bank President Dennis Lockhart gives a speech in New York.

-Compiled from staff and wire reports.

Advertisement