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Fiscal Negotiations Halted, Markets Agitated


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

Political developments in Washington continued to dominate the day's trading. In the morning, Republican Representative Paul Ryan stated that the Senate's deal was not sufficient and that the House would formulate a new plan. Later in the afternoon, the senators said that negotiations had been halted to ascertain the structure of the deal from the House. Markets generally met these news reports negatively.

An ICSC survey of US consumers found that 40% have reduced -- or would reduce -- their spending due to the government shutdown. A German survey of financial market experts saw European economic expectations improving even though feelings on the current situation were slightly worse than they were last month.

US Treasuries were about unchanged from yesterday's close. Yesterday, because the bond market was closed for Columbus Day, 10-year Treasury futures fell roughly the equivalent of a 3.5 basis point rise in yields. Interest-rate-sensitive utility stocks were the worst performers today. All ten sectors of the S&P 500 (INDEXSP:.INX) declined; the number of declining stocks outnumbered the number of advancing stocks by a 4:1 margin.

Before the market open, FedEx (NYSE:FDX) announced a 32 million share buyback plan, which is about 10% of the company's outstanding shares. As of yesterday's close at $115.37, the deal will total $3.7 billion. In other news, it was reported that private equity giant Cerberus is conducting additional due diligence in order to purchase the entire company.

In the pre-market, Johnson & Johnson (NYSE:JNJ) beat earnings expectations. Coca Cola (NYSE:KO), Citigroup (NYSE:C), and Domino's Pizza (NYSE:DPZ) all missed earnings expectations. After the market closed, tech giants Intel (NASDAQ:INTC), and Yahoo (NASDAQ:YHOO) both beat earnings.

Tomorrow's Financial Outlook

The private NAHB housing market survey of builder sentiment for October will be released tomorrow morning. Economists estimate that builder sentiment will decline to 57 from 58 last month on a downtrend in new building permits. The Fed will release its Beige Book of economic anecdotes from mid-August until early October.

In global market-moving news, the UK will release its September employment figures.

Earnings will be very busy tomorrow with 24 major US companies reporting. Notable reports include Bank of America (NYSE:BAC), BlackRock (NYSE:BLK), Abbott Labs (NYSE:ABT), Pepsi (NYSE:PEP), American Express (NYSE:AXP), eBay (NASDAQ:EBAY), IBM (NYSE:IBM), and SanDisk (NASDAQ:SNDK).

Twitter: @Minyanville

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No positions in stocks mentioned.

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