US stocks head for weekly loss

Mixed economic data and worries over an impending US government shutdown have fuelled selling on Wall Street today, sending the major stock index benchmarks lower.

With under an hour to the close of share trading on Wall Street, the Dow was down 0.62% or 95 points at 15,233, while the wider-encompassing S&P 500 slipped 0.55% to 1689.3. That leaves both indices down more than 1% for the week, following three weeks of gains previously.

Sentiment has been weakened by US Congress’ inability to strike a budget deal for the new fiscal year, with the deadline before a government shutdown now barely more than one working day away.

Economic data has not supported the stock market. The consumer sentiment index from the University of Michigan fell in September to 77.5, the lowest final reading for the index since April. A fall in consumer attitudes would normally be expected to lead to weaker consumer spending, which makes up the majority of the US economy.

Consumer spending did advance slightly in August, rising to 0.4%, which will help to swell third-quarter GDP. The modest nature of the increase combined with wavering consumer sentiment does not inspire me with too much confidence, however.

Inflation is still not showing any signs of warming up, with the Personal Consumption Expenditure (PCE) price index rising just 0.1% in August. That takes the year-on-year change to 1.2%, below the Fed’s target rate. Given that part of the Fed’s mandate is to control inflation, both on the upside and downside, this could well stay the Fed’s hand from tapering once again at the October FOMC meeting.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.