Debt Talks Takes Toll On Wall Street Earnings


Wall Street fell on Wednesday as troubling signs from United States corporations and falling demand for long-lasting manufactured goods discouraged investors already nervous about faltering debt talks in Washington, DC.

A profit warning from Juniper Networks which sent its shares down 20 percent, and moderating order growth at Emerson Electric Co compounded investors’ concerns about corporate strength after some high profile earnings misses. Emerson’s shares fell nearly 7 percent.

The S&P 500 has lost more than 2 percent this week as acrimonious debate about raising the U.S. debt ceiling has left investors fretting over a U.S. debt default or a possible credit downgrade later in the year.

“That is going to remain front and center in terms of driving market activity,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia. “Without a deal and the clock winding down, I think investors’ anxiety is only going to increase.”

Lawmakers have until August 2 to agree a deal or face a potential default on U.S. government debt.

The Dow Jones industrial average dropped 109.63 points, or 0.88 percent, to 12,391.67. The Standard & Poor’s 500 Index fell 16.43 points, or 1.23 percent, to 1,315.51. The Nasdaq Composite Index lost 49.12 points, or 1.73 percent, to 2,790.84.

The S&P 500 and the Nasdaq have fallen for three straight days while the Dow was eyeing its fourth day of losses as the uncertain environment kept investors from making big commitments.

“We haven’t been committing new capital. We’ve been holding off on making any purchases over the last few days,” said Eric Kuby, chief investment officer at North Star Investment Management Corp in Chicago. “If you multiply us by the other 10,000 money managers, you get a sense of why the market is getting a little soft.”

Further pressuring the market, new orders for long-lasting U.S. manufactured goods fell unexpectedly in June, and a gauge of business spending plans slipped.

Corporate earnings have been coming in relatively weak in recent days, compared to the beginning of the earnings season, with concern centering on some big industrial names.

Industrial conglomerate Emerson Electric Co said its order growth moderated in the three months to June and warned that U.S. and European economies have slowed in the past two months. The stock fell 6.6 percent to $50.46.

Emerson’s news came after troubling signs from Caterpillar Whirlpool Ingersoll-Rand and PepsiCo all of which were punished hard in their share price by investors.