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Stocks Fall on Day Two of Shutdown

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

As the government shutdown moves into day two, investors are attempting to wipe yesterday's stock market gains away as the major indexes sink across the board. While it was clear investors were OK with a one-day shutdown, the longer this lasts, the less investors will be able to tolerate it, as we are seeing today. As of 12:45 p.m. EDT, the Dow Jones Industrial Average (DJINDICES: ^DJI  ) is down 65 points, or 0.43%, while the S&P 500 has lost 0.23% and the NASDAQ has slid 0.13%.

A few Dow winners
Shares of United Technology (NYSE: UTX  ) are down by 2.5%, making the stock the Dow's worst performer of the session at this time. The move comes after the company's Sikorsky Aircraft unit has warned that an extended government shutdown will threaten the company financially. The Sikorsky unit makes Black Hawk helicopters and has slowed production since the shutdown went into effect. Sikorsky has an $8.5 billion contract to build the Black Hawk for the U.S. military, but now that Department of Defense inspectors are on furlough, they can't inspect the aircraft as they are being assembled, which puts Sikorsky in a tough spot. Investors should also remember that this could be an issue other units of United Technology may begin to face if the shutdown drags on for a number of days. 

Shares of Coca-Cola (NYSE: KO  ) are down 1.5% this afternoon after an analyst at JPMorgan Chase revised his 2014 earnings-per-share projections. The analyst still has a neutral rating on the stock and a price target of $43, but due to Coke's hedged yen position, the analyst feels 2014 earnings will come in $0.05 or $0.06 below his original estimate of $2.27 per share. Japan accounts for about 12% to 13% of Coke's operating profits, so a big drop in the yen could really impact the company's earnings.  

After gaining 2.4% yesterday, shares of Merck (NYSE: MRK  ) are down 0.6% today. Yesterday's move came after the company announced a restructuring plan that is intended to cut costs by $2.5 billion in the next few years. But after further review, a number of analysts are now questioning whether the best way to improve the company's health is by reducing its workforce. Merck needs some big blockbuster drugs in the future, and the only way to get those is by doing the research and development today. The company is certainly in a catch-22 as it tries to rein in spending without materially hurting its future -- and that is certainly hurting investors' confidence in the company today.

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Related Tickers

9/30/2016 5:01 PM
^DJI $18308.15 Up +164.70 +0.91%
KO $42.32 Up +0.29 +0.69%
Coca-Cola CAPS Rating: ****
MRK $62.41 Up +0.50 +0.81%
Merck and Co. CAPS Rating: ****
UTX $101.60 Up +0.54 +0.53%
United Technologie… CAPS Rating: ****