Wall Street in retreat as Fed officials speak

US shares have picked up from where they left off at the end of last week, moving lower under a cloud of worry over bickering in Washington and uncertainty over the Fed’s actions.

Goldman Sachs, Visa and Nike were welcomed into the Dow Jones Industrial Average today, and all three have slipped into the red, moving in the same direction as the broader market. Goldman’s performed the worst of the three newcomers, shedding 2.5% of its value.

Banks have struggled today, with Citigroup losing 3%, JP Morgan dropping 2% and Bank of America down 1.8%. The sector-wide decline seems to have been sparked by a report in the Financial Times that claims Citigroup has seen a substantial fall in trading revenue over the summer. Citi has the largest exposure of any US bank to emerging markets, which have been struggling recently.

By early afternoon in New York, the Dow was down 0.30% or 47 points at 15404, while the S&P 500 dropped 0.5% to 1701.2.

Discussion will carry on this week in Washington, as law makers seek to pass a resolution to provide funding for the US government beyond 1 October. Republicans passed a bill last week to keep funding going until the middle of December but with the caveat that funding be blocked for President Obama’s healthcare plan. More brinkmanship and bitter wrangling in Washington with the threat of government being shut down next week is not beneficial for both business or consumer confidence and could constrain spending at retail and enterprise levels.

Despite a large number of Federal Reserve officials speaking recently, there still remains a lack of clarity from the Fed over its intentions. St Louis Fed President James Bullard said last week that a small taper in October was possible, but New York Fed William Dudley said in a speech today that fiscal threats ‘loom very large’.

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