Stocks Down On Government Shutdown Fears

A top Federal Reserve official tried to calm financial markets Friday, but while stocks initially rose on his comments, indexes soon turned sharply lower. A rising possibility of a government shutdown pressured stocks.




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The Nasdaq composite climbed as much as 0.9% after New York Fed President John Williams said the central bank is paying close attention to the markets in setting its monetary policy. But the composite turned back around, and was down 1.5% in afternoon trading.

From the prior peak, the Nasdaq’s decline of 21.7% leaves it in a bear market.

The S&P 500 also reversed lower and was down 0.6%. The Dow Jones industrial average was down 0.5%. (For updates on this story and other market coverage, visit Stock Market Today page.)

Volume tracked sharply higher because Friday marks the quarterly expiration of futures and options on stocks and indexes, what’s known on the Street as quadruple witching.

Government Shutdown More Likely

Stocks came down as the threat of a government shutdown grew. President Donald Trump tweeted that it could be a “long” shutdown and expressed pessimism about reaching a deal before the midnight deadline. For a stock market that needs little reason to sell off, the news doused a morning rebound.

That helped erase gains that followed an interview New York Fed President John Williams gave on CNBC. Williams said the Fed was right to target two interest-rate increases in 2019. But he added that Fed officials “are listening very carefully to what’s happening in the markets.”

Williams’ comments didn’t move the bond market much, either. The yield on the 10-year Treasury note did move up as his remarks aired, but at 12:45 p.m. ET, the yield was 2.79%, up from 2.78% Thursday.

The Nasdaq underperformed because some of its largest stocks hit new lows.

Apple (AAPL) fell to the lowest price since Feb. 9 as the former king of the market finds itself 34% off its high. Sales of new iPhones are below expectations, and the company’s services business is also hitting hurdles.

Microsoft (MSFT), which has overtaken Apple as the largest stock, lost more than 2% in heavy volume and is trading below the 200-day moving average. Amazon.com (AMZN) dropped to the lowest point since early April. Its Accumulation/Distribution Rating is a lowest-possible E.

Market losses were broad, with decliners over advancers by 10-to-3 on the Nasdaq and by nearly 5-to-2 on the NYSE.

Only the utility sector was higher. Utilities Select Sector SPDR ETF (XLU) rose 0.6% as investors sought havens in dividend plays.

The IBD 50, which lists top-rated growth stocks, was down 2.2%. Trade Desk (TTD) slid 7.5% and is no longer forming a proper base. It is just one of many leaders whose chart patterns are trashed.

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