While you were sleeping: Clock ticks on US debt deal

Oct 16 (BusinessDesk) – Wall Street dropped as the October 17 deadline for an agreement to lift the US debt ceiling and avoid a government default approached rapidly as lawmakers' bickering continued.

The House and the Senate were working on competing plans for a resolution.

"There are a lot of opinions about what direction to go. There have been no decisions about exactly what we will do," House Speaker John Boehner told reporters, repeating that he was determined not to allow a default and Republican efforts would continue, Reuters reported.

In afternoon trading in New York, the Dow Jones Industrial Average fell 0.30 percent, the Standard & Poor’s 500 Index shed 0.23 percent and the Nasdaq Composite Index declined 0.17 percent.

“On minute we are closer to it and the next minute we are farther apart," Frank Ingarra, head trader at Greenwich, Connecticut-based NorthCoast Asset Management, told Bloomberg News. "In the short-term there is going to be this up and down because we are so near a high, and I would imagine it is not going to break through that high until we have a deal.”

Shares of McDonald's and Home Depot, both 1 percent weaker, paced losses in the Dow.

The US dollar gained 0.5 percent against the euro.

Richard Fisher, the hawkish president of the Federal Reserve Bank of Dallas, told Reuters that even he does not think he could make a case for scaling back bond purchases at the Fed's policy meeting on October 29-30 because of the fiscal stalemate.

"My personal opinion is that it's not in play," Fisher told Reuters on Tuesday. "This is just too tender a moment."

Meanwhile, manufacturing in the New York region expanded at a rate that fell short of expectations this month, a report showed.

The latest US earnings were mixed.

Citigroup reported third-quarter earnings that failed to meet expectations because of a decline in fixed-income revenue. Citigroup shares were last 0.3 percent weaker.

"Investors should have been expecting this," Tom Jalics, senior investment analyst at Key Private Bank, told Reuters. "The investment bank was a little bit weaker than people had been expecting, but the company's management had been telegraphing this for the past 6-8 weeks."

Shares in Apple are back above the US$500 mark after the company hired the chief executive of Burberry to manage the iPhone maker's more than 400 retail outlets and online store. Angela Ahrendts will start at Apple in the spring of 2014.

In Europe, the Stoxx 600 Index closed 0.8 percent higher.

German investor confidence climbed for a third month in October, according to the latest data of the ZEW Center for European Economic Research. The ZEW index of investor and analyst expectations rose to 52.8 from 49.6 in September.

Germany’s DAX rallied 0.9 percent to close at a record high.

“Today’s ZEW index gives the impression that analysts believe in the invulnerability of the German economy,” Carsten Brzeski, senior economist at ING Groep NV in Brussels, told Bloomberg News. “The new dark clouds coming from the other side of the Atlantic have not yet blacked out analysts’ optimism.”

Elsewhere, the UK's FTSE 100 rose 0.6 percent, while France’s CAC 40 climbed 0.8 percent.

(BusinessDesk)

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