U.S. stock indexes were sharply lower on the final day of the third quarter as the Senate reached a deal to avoid a government shutdown and as House Democrats vote on the cornerstones of President Biden’s economic agenda.
The Dow Jones Industrial Average slid 430 points, or 1.1%, while the S&P 500 index fell 0.96% and the Nasdaq Composite index lost 0.38%.
|I:DJI||DOW JONES AVERAGES||33987.35||-403.37||-1.17%|
|I:COMP||NASDAQ COMPOSITE INDEX||14506.377925||-6.06||-0.04%|
The Senate reached a stopgap deal overnight that would fund the government until early December. Congress must pass the bill before midnight to avoid a shutdown. Lawmakers must still raise the debt ceiling by Oct. 18 to prevent the U.S. from defaulting on its debt.
Additionally, House Speaker Nancy Pelosi is still trying to iron out plans to bring both the bipartisan infrastructure bill and the $3.5 trillion spending plan up for a vote in the lower chamber.
This as Democratic Sen. Joe Manchin of West Virginia said the spending plan would need to be trimmed down to about $1.5 trillion to secure his vote. Manchin holds a key swing vote for Democrats who are trying to pass the $3.5 trillion human infrastructure plan via budget reconciliation to avoid a Republican filibuster.
Initial jobless claims unexpectedly rose by 11,000 last week to 362,000 filings. Continuing claims, meanwhile, declined after the extra $300 per week in supplemental benefits expired the week before the data was collected. A separate release showed second-quarter gross domestic product was revised higher by 0.1 percentage points to 6.7%.
Amid the whirlwind of headlines the yield on the 10-year note was unchanged at 1.52%.
In stocks, interest-rate sensitive financials, like Bank of America Corp. and Wells Fargo & Co., turned lower after early gains.
|BAC||BANK OF AMERICA CORP.||42.45||-0.64||-1.49%|
|WFC||WELLS FARGO & CO.||46.37||-0.68||-1.45%|
So too did the recently underperforming growth names, including Microsoft Corp. and Apple Inc., that typically lag in an environment of rising rates.
Meanwhile, Bed Bath & Beyond Inc.’s quarterly results fell short of Wall Street estimates and the company slashed its outlook amid concerns over the COVID-19 delta variant and supply-chain disruptions.
|BBY||BEST BUY CO., INC.||106.54||-2.85||-2.61%|
CarMax Inc. reported record quarterly sales, but its profit fell short of analyst expectations.
Kohl’s Corp. received a two-notch downgrade to “underperform” at Bank of America, which said supply chain disruptions could impact the retailer’s recovery plans.
Elsewhere, Perrigo Co. agreed to a 297 million euro settlement over an Irish tax dispute. The figure is just a fraction of the 1.64 billion euros bill that was initially levied against the company.
|PRGO||PERRIGO CO. PLC||48.03||+4.53||+10.41%|
In deals, Merck & Co. will buy drugmaker Acceleron Pharma Inc. for $180 per share, or about $11.5 billion. The deal represents a 2.65% premium from where Acceleron shares settled Wednesday.
|MRK||MERCK & CO., INC.||75.58||+0.52||+0.69%|
|XLRN||ACCELERON PHARMA INC.||173.95||-1.41||-0.80%|
In commodities, West Texas Intermediate crude oil ticked up 56 cents to $75.39 a barrel and gold jumped $36.70 to $1,759.60 an ounce.
Overseas trading was choppy.
In Europe, Germany’s DAX 30 slid 0.68% while France’s CAC 40 and Britain’s FTSE 100 declined 0.62% and 0.31%, respectively.
Asian bourses were mixed with China’s Shanghai Composite index climbing 0.9%, Japan’s Nikkei 225 losing 0.31% and Hong Kong’s Hang Seng index declining 0.36%.