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While you were sleeping: Trump shutdown threats hit Wall St

Wall Street's fear gauge jumped 5.7%.

Margreet Dietz
Thu, 24 Aug 2017

Wall Street plunged as US President Donald Trump's threats to shut down the government if Congress does not fund a wall on the southern border revived concern about the administration's ability to move ahead with plans for tax reform.

At the close of trading in New York, the Dow Jones Industrial Average was down 87.80 points, or 0.4%, to 21,812.09. The Nasdaq Composite Index fell 0.3% to 6278.41 and the Standard & Poor's 500 Index fell 0.35% to 2444.04. 

"If we have to close down our government, we're building that wall," Mr Trump told a rally in Phoenix. "One way or the other, we're going to get that wall."

Wall Street's fear gauge-the CBOE Volatility Index or the VIX-jumped 5.7% to 12.00. US treasuries rose, sending the yield on 10-year notes three basis points lower to 2.18%.

"Trump saying he would be willing to shut down the government over the wall obviously doesn't really inspire much confidence in anyone," Michael O'Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut, told Reuters.

"The debt limit, which is truly urgent and something that needs to be addressed, where theoretically failure should not be an option, that is something of a litmus test for the market."

In the Dow, Home Depot and Johnson & Johnson dropped 0.5% and 1.1% respectively, outweighing gains by United Technologies and IBM, up 1.7% and 1.0% respectively.

DIY retailer Lowe's sank 6.1% immediately after the company posted quarterly results that fell short of expectations and lowered its outlook for its operating margin growth. The shares later gained to finish 3.7% lower.

Meanwhile, a Commerce Department report showed new US home sales unexpectedly fell in July, dropping 9.4% to a seasonally adjusted annual rate of 571,000 units, the lowest level since December.

"The third-quarter sales data are starting out significantly below the second-quarter average, and many other housing reports have also shown some recent weakening in their respective trends," Daniel Silver, an economist at JPMorgan in New York, told Reuters.

"Today's report strengthens our conviction that real residential investment will decline in the third quarter."

On Thursday, central bankers from around the world gather for their annual meeting in Jackson Hole, Wyoming, where US Federal Reserve chairwoman Janet Yellen is scheduled to speak on Friday.

In Europe, the Stoxx 600 Index finished down 0.5%. The UK's FTSE 100 Index closed little changed from the previous day, while France's CAC 40 Index fell 0.3% and Germany's DAX Index slid 0.5%.

(BusinessDesk)

Margreet Dietz
Thu, 24 Aug 2017
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While you were sleeping: Trump shutdown threats hit Wall St
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