"The market hates uncertainty, and we have a lot of it currently," noted Schaeffer's Senior Technical Strategist Ryan Detrick, CMT. "The government shutdown keeps getting the headlines, but under the surface, the much bigger concern is the debt ceiling decision, which comes to a head on Oct. 17. To me, we can live with a government shutdown, but need to get a resolution on the debt ceiling pronto." Words from President Obama failed to bring comfort to investors, as the Dow Jones Industrial Average (DJI) trended lower throughout the day, closing with a triple-digit loss.
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Once again, the Dow Jones Industrial Average (DJI - 14,776.53) spent the entire session in the red, as its losses gradually built throughout the session. By the bell, the blue-chip index settled at its lowest close since Aug. 27, down 159.7 points, or 1.1%. Wal-Mart Stores (NYSE:WMT) paced the three advancing Dow names with a gain of 1.4%, while Visa (NYSE:V) continued to lead the declining majority, shedding 2% on the day.
The S&P 500 Index (SPX - 1,655.45) was sharply lower as well, losing 20.7 points, or 1.2%, to close south of its 80-day moving average for the first time since Sept. 4. The Nasdaq Composite (COMP - 3,694.83) surrendered even more of its value, giving back 75.5 points, or 2%, to close just shy of its intraday low.
The CBOE Market Volatility Index (VIX - 20.34) continued to gain ground, adding 0.9 point, or 4.8%. The fear barometer has closed above the 20 level just three times in 2013.
A Trader's Take:
"Earnings season is upon us, but today remained all about Republicans versus Democrats in another session fueled by Washington drama," summarized Detrick. "Elsewhere, momentum names that had held up so well previously were crushed today, and former leaders like small-caps and tech stocks finally cracked. You could argue all groups need to drop before a major bottom can form, and this could be phase one of that."
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