US stocks down as investors wait on debt news
By JOSHUA FREED
AP Business Writer
There's deal talk in Washington. On Wall Street, it's wait-and-see.
The big stock indexes fell slightly on Tuesday as Republican and Democratic leaders in the Senate reported that a deal over the nation's borrowing limit appears to be getting closer.
Unless the borrowing limit is raised, the U.S. will bump up against a Thursday deadline that could lead to a default on government debt. That possibility has rattled markets all month.
There was reason for Wall Street to be noncommittal on Tuesday. For one, House Republicans were drafting their own plan that Democrats opposed. Also, any deal reached this week might simply set up another showdown a few months down the road.
In early afternoon trading, the Dow Jones industrial average was down 32 points at 15,269. The Standard & Poor's 500 index was down three points at 1,708. The Nasdaq composite fell three points to 3,812.
Of the 10 industry groups in the S&P 500, only energy stocks rose. The biggest declines were in consumer discretionary and industrial stocks.
The general direction for stocks was down all morning, with indexes about flat around midday before going back to declines in the afternoon. It was clear that traders were hanging on every word out of Washington. The losses on the Dow shrank by about 40 points during a short press conference by House Speaker John Boehner.
Uri Landesman, president of Platinum Partners, a New York-based investment management group, said he thinks there will be a deal, but that investors are making a mistake to focus on it so heavily since the economy still has so many risks. Investors aren't appreciating the risk of poor economic reports, slow profit growth and the possibility of flare-ups in conflicts with Iran and Syria, which could cause a spike in energy prices.
"There's a lot more risk to the downside," Landesman said. "I don't think things are that robust out there."
Microsoft rose 36 cents, or 1.1 percent, to $34.81 after an analyst said the company's new structure clears the way for more growth.
FedEx shareholders were happy about expanded stock buybacks. FedEx's stock rose $5.83, or 5 percent, to $121.20.
Charles Schwab rose $1.42, or 6.5 percent, to $23.43 after the brokerage company said its quarter profit rose 19 percent as trading and interest revenue increased.
Advertising company Omnicom Group reported adjusted results and revenue that were higher than analysts had expected. Its stock rose $1.59, or 2.5 percent, to $65.55.
The yield on the 10-year T-note rose to 2.72 percent from 2.69 percent on Friday. Yields on three-month and six-month T-bills also rose. Bond trading was closed Monday for Columbus Day.
The price of oil fell 69 cents to $101.72.
Stocks in Europe rose. Germany's DAX rose 0.9 percent and Britain's FTSE 100 rose 0.6 percent.
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