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Debt Ceiling Negotiations Continue to Frustrate Traders


Today's financial recap and tomorrow's financial outlook.

Asian markets were down in sympathy with US equity futures overnight. The Japanese Nikkei (INDEXNIKKEI:NI225) was the worst performer, falling 1.22%. The World Bank downgraded its Developing East Asia growth forecast to 7.1% for 2013 from its prior forecast of 7.8% in April. Most troubling was the downgrade of China's growth rate; the current year forecasts were lowered to 7.5% from the prior forecast of 8.3% in April.

S&P 500 (INDEXSP:.INX) futures reached an intraday bottom of -18.50 points near the opening and then shot higher for the rest of the day. It's worth noting that the trade lower overnight was on abnormally light volume. Today's total equity volume was at 11.12 billion shares vs. the 10.58 billion 15-day average. Consumer discretionary, financial, and material sector stocks were the worst performers today; all were down more than 1%. Total exchange breadth remained solidly negative at 4:1 throughout the day.

The negotiations over the debt ceiling continued to dominate intraday trading. In the daily White House press briefing, Press Secretary John Carney stated that President Obama backed a proposed Senate vote for a one-year debt ceiling resolution. If need be, the president would accept raising the debt ceiling for less than a year. Over the weekend, House Speaker John Boehner said that he did not have the support for a bill that raised the debt ceiling without other concessions.

Over the weekend, news surfaced that BlackBerry (NASDAQ:BBRY) was being approached by a number of interested parties for a competitive takeover bid. Potential suitors include Cisco (NASDAQ:CSCO), Google (NASDAQ:GOOG), and SAP (NYSE:SAP). BlackBerry finished 4% higher today.

Tomorrow's Financial Outlook

Economic data releases are still on hold while the government remains shut down. August's trade balance will be delayed until a later date. Other economic data due out includes the NFIB small business optimism index and the Investor's Business Daily economic optimism index.

Global market-moving data will be particularly robust tomorrow. On the calendar are China's services PMI, Switzerland's unemployment rate, Germany's trade balance, Switzerland's retail sales, and Germany's factory orders. The data release that has the most potential to move markets is Germany's factory orders at 5:00 a.m ET. Economists estimate that orders will rise 1.1% month-over-month in August.

The third-quarter earnings season will get started with Alcoa (NYSE:AA) and Yum Brands (NYSE:YUM).

Disclosure: Minyanville Studios, a division of Minyanville Media, has a business relationship with BlackBerry.

Twitter: @Minyanville

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