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.
Stocks fell for the third straight day today as worries about a potential government shutdown mixed with rumors about the Fed's upcoming stimulus taper to rattle investors once again. The Dow Jones Industrial Average (DJINDICES:^DJI) finished down 50 points, or 0.3%, to close at 15,401.
In the latest Fed news, New York President William Dudley said plans for initiating the taper are still on track as long as the economy keeps improving, and Dallas President Richard Fisher said he had advocated for a $10 billion cut to the $85 billion monthly bond-buying program in last week's meeting. However, Atlanta Fed President Dennis Lockhart stood by the decision to delay the taper last week, noting that job gains have only added 148,000 over the last three months. The Fed next meets October 29-30, though it seems after last week's big misjudgment that investors would be better off not playing guessing games and obsessing over every comment.
Meanwhile, the market continued to await the Senate's next move after the House sent over a bill that would shut down the government on October 1 if Congress does not vote to defund Obamacare. The Democratic-led Senate has said that the idea is dead on arrival, but a core of Tea Party Republicans including Ted Cruz have vowed to fight, and Cruz has suggested filibustering any attempt to keep Obamacare alive. We can't predict the outcome of this debate, but continued steps toward a government shutdown will only put negative pressure on the market.
On the Dow today, financial stocks were the poorest performers as Goldman Sachs (NYSE:GS) in its first day on the index fell 2.7% while JPMorgan Chase (NYSE:JPM) dropped 2.5%. The sectorwide decline seemed to be paced by Citigroup (NYSE:C), which slid 3.2% after announcing it would lay off 1,000 employees in its mortgage unit, following the lead of other big banks. Perhaps more importantly for the industry, The Financial Times reported that the bank is headed for lower bond-trading revenue due to a decline in interest rate and currencies business. JPMorgan was also on the receiving end of what appears to be yet another mortgage suit from the Justice Dept., which may file allegations tomorrow, saying that the bank violated securities laws in bond sales during the run-up to the financial crisis.
Finally, General Electric (NYSE:GE) was one of the Dow's biggest gainers, moving up 1.1% after the conglomerate won a $2.7 billion contract from Algeria's national electricity and gas company. The deal is one of GE's biggest power plant orders ever, and will pave for the addition of 9 gigawatts of capacity. With energy demand in Algeria growing 14% annually, the agreement could lead to similar purchases down the road.