Stocks extend losses towards end of day

US share prices have continued to decline as the day has progressed, with details of a provisional budget agreement jangling taper alarm bells.

With under an hour to the close of trading on Wall Street, the S&P 500 was facing up to its biggest loss in almost five weeks, down 0.88% to 16.0 points at 1786.8. The Dow Jones was faring a little better, off 0.52% at 15,890.

The fall in share prices on Wall Street is evidence that the ‘good news is bad news’ mentality still holds sway, with investors choosing to focus on the possible consequences for Fed stimulus should the bipartisan budget agreement garner enough votes in the House and the Senate.

Putting aside the issue of a Fed taper, which seems very likely to happen in the next few months anyway, the fact that politicians in Washington have been able to reach a compromise, apparently avoiding the bitter wrangling that we have seen in the past, is an upbeat development for the economy as a whole, reducing the chances that we could run into another damaging shutdown.

Costco has slid more than 1% today after the wholesaler announced first-quarter results that missed on both the earnings and revenue fronts, with rising costs an area of concern.

The Fed-watch could possibly take another twist tomorrow with the release of retail sales data for November. A monthly increase of 0.6% is expected. While a strong result would provide more ammunition to the hawks at the Fed pushing for a taper at the December FOMC meeting, it would also be a big positive for the economy heading into the most important shopping period of the year.

We also have jobless claims before the US markets open tomorrow.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.

Find articles by analysts