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Political Negotiations Dominate Today's Trading

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

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Market activity was very quiet overnight with economic data releases dominating the price action. China non-manufacturing PMI rose from a two-year low of 53.9 to 55.4. Eurozone retail sales grew 0.7% in August, reducing the rate of the annual decline to 0.3% from -0.7% last month.

US trading was dominated again today by the specter of a US debt default. Most investors believe that a default is extremely unlikely. In addition, House Speaker John Boehner stated today that he would violate the "Hastert Rule" of bringing a bill to the floor that would raise the debt ceiling without the full support of his party.

The S&P 500 (INDEXSP:.INX) reached an intraday low of -1.39% after opening down only a few points. Following the news reports that some progress was being made in Washington, markets recovered modestly. The ISM non-manufacturing index showed a sharp slowdown from last month's eight-year high. Sharp drops in business activity and employment were the main causes for the slowdown. Weekly jobless claims rose to 308,000 in the past week from 307,000 in the week prior. This was near the 308,750 four-week moving average of claims.

Markets were jolted today with news that there was a shooting at the United States Capitol building and that government buildings were on lockdown. Reportedly, an individual attempted to ram the gates of the White House and fled the scene to the Capitol mall. The S&P 500 quickly fell 9 points before recovering the losses during the day.

Treasury bills had a very funky day; bills that were due before October 31 continued to trade at abnormal discounts on fears that the Treasury would delay the maturity payment of these obligations.

Shares of electric automobile maker Tesla (NASDAQ:TSLA) remain under pressure after a customer's Model S car caught on fire. Despite the company's insistence that this event was not indicative of any mechanical failures in the car, shares fell 4.2% to $173.31.

Tomorrow's Financial Outlook

There will be no jobs report released tomorrow due to the government's shutdown. The Bureau of Labor Statistics was unable to completely compile the report due to the furlough of government workers and will not release it until the government is reopened.

The Bank of Japan will release its monthly monetary decision overnight. Earlier today, it was leaked that the Bank of Japan had no plans to increase its monetary stimulus until next year. Another market-moving release scheduled for tomorrow is the Chinese HSBC/Markit services PMI.

There will be no major earnings reports released in the US tomorrow.

Twitter: @Minyanville

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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