Wall Street knocked lower by debt limit worries, Apple
NEW YORK (Reuters) - U.S. stocks fell on Tuesday on worries over the debate brewing in Washington over raising the U.S. borrowing limit, while Apple's stock extended its fall on concerns of weaker demand for its products.
Economic data offset some of the negative tone after retail sales rose more than expected in December. But manufacturing activity in New York state contracted for the sixth month in a row in January.
On Monday, President Barack Obama rejected any negotiations with Republicans over raising the U.S. debt ceiling. The United States could default on its debt if Congress does not increase the borrowing limit.
Resolving the debt ceiling debate is more a question of how than if. Investors don't expect a U.S. default, but they are also wary of another eleventh-hour agreement like the one in August 2011.
"The concern is just the uncertainty and the negotiating going down to the last minute," said John Fox, co-manager of the FAM Value Fund, in Cobleskill, New York.
Apple (AAPL.O) fell for the third day in a row, weighing on the Nasdaq after reports on Monday of cuts to orders for iPhone parts. Apple was down more than 2 percent at $491.96. The stock fell below $500 for the first time in almost a year on Monday.
The Dow Jones industrial average .DJI slipped 29.55 points, or 0.22 percent, to 13,477.77. The Standard & Poor's 500 Index .SPX fell 4.35 points, or 0.30 percent, to 1,466.33. The Nasdaq Composite Index .IXIC gave up 18.82 points, or 0.60 percent, at 3,098.68.
Although Tuesday's economic data was mostly positive, reaction in the market was likely to be limited since investors' attention centered on the negotiations over the debt ceiling and spending cuts, said Hugh Johnson, chief investment officer of Hugh Johnson Advisors LLC in Albany, NY.
"'Fiscal Cliff Two' is now the principal focus of investors," he said.
An expected lackluster earnings season also kept investors from taking aggressive bets. Analyst estimates for the quarter have fallen sharply since October. S&P 500 earnings growth is now seen up just 1.9 percent from a year ago, Thomson Reuters data showed.
Homebuilder Lennar (LEN.N) reported a sharp rise in quarterly profit, but the stock fell 2.2 percent to $40.11 on worries that growth in orders was slowing.
Shares of Dell DELL.O rose 3.1 percent to $12.67 the day after sources said the company is in talks with private equity firms on a potential buyout.
Facebook (FB.O) added 0.6 percent to $31.11 ahead of a major news event at its headquarters. The secretive nature of the event has triggered a guessing game about what the company could unveil.
(Editing by Kenneth Barry)
- Tweet this
- Share this
- Digg this
India promised on Monday to open up the coal industry to private players and moved closer to selling a stake in a state-run oil company, as Prime Minister Narendra Modi picked up the pace on economic reform days after relaxing fuel price controls. Full Article