Wall Street fell on Wednesday as troubling signs from U.S. corporations and falling demand for long-lasting manufactured goods discouraged investors already nervous about faltering debt talks in Washington.
A profit warning from Juniper Networks
The S&P 500 <.SPX> 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 <.DJI> dropped 109.63 points, or 0.88 percent, to 12,391.67. The Standard & Poor's 500 Index <.SPX> fell 16.43 points, or 1.23 percent, to 1,315.51. The Nasdaq Composite Index <.IXIC> 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. [ID:nN1E76Q0BV]
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
Emerson's news came after troubling signs from Caterpillar
We started off the earnings season with a bang, but the ones that we've been getting in the past few days, mostly industrial ones, have been on the light side, and often pointing to an economic slowdown, said Jack DeGan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.
Juniper's results weighed on the technology sector, with semiconductors among the weakest. The PHLX semiconductor index <.SOX> fell 2.9 percent. Texas Instruments
In the health sector, WellPoint
But on the upside, Amazon.com Inc
In Washington, a Republican plan to cut the U.S. deficit met stiff opposition, reducing the chances of a late compromise to avoid a default.
(Editing by Kenneth Barry)