December 7, 2013
Year's winners lead Wall St lower as default angst rises
US stocks slid on Tuesday as traders cashed in gains in some of the year's best performers amid little progress to end a political crisis in Washington that could affect the US fiscal standing and economic recovery.
The Dow Jones industrial average fell 159.71 points or 1.07 percent, to 14,776.53, the S&P 500 lost 20.67 points or 1.23 percent, to 1,655.45 and the Nasdaq Composite dropped 75.544 points or 2 percent, to 3,694.833.
European shares fell with medical technology group Getinge slumping after a profit warning, as the United States' budget stalemate weighed on stock markets.
Even though most investors still expected an eventual deal to be reached on the US budget and its debt ceiling, many were prepared to "short" the market, or bet on the market falling, until the deadline for resolving the standoff nears.
The pan-European FTSEurofirst 300 index fell for the fourth time in five sessions, declining by 0.5 percent to 1,234.72 points. The euro zone's blue-chip Euro STOXX 50 index also fell 0.4 percent to 2,912.53 points.
Getinge was the worst performer on the FTSEurofirst, dropping 9.4 percent after it became the latest European company to warn on profits, following the likes of consumer goods group Unilever and cruise operator Carnival
The profit warnings have weighed on stock markets this month, with analysts having trimmed 2013 earnings estimates for the pan-European STOXX 600 index by 3 percent since the start of the third quarter.
Markets have also come back down from multi-year highs after the US government had to partially shut down this month due to disagreement among politicians over the country's budget.
The US budget standoff has led to concerns about the $16.7 trillion US debt ceiling, which Treasury Secretary Jack Lew has said the government will hit no later than Oct. 17.
The FTSEurofirst 300 remains up 9 percent since the start of 2013 while the Euro STOXX 50 is up 10 percent, but the US stalemate has pushed those indexes off a 5-year high for the FTSEurofirst 300 and a 2-year high on the Euro STOXX 50 reached in late September.
Nevertheless, most investors still expect a deal to be reached eventually, and US President Barack Obama said he would accept a short-term increase in the nation's borrowing authority to avoid a default.
Meanwhile, Japan's Nikkei stock average notched its first rise in five sessions, tracking gains in other Asian markets, but a lack of progress in ending the US government shutdown and the debt-ceiling standoff kept investors on edge.
The benchmark Nikkei closed up 0.3 percent at 13,894.61, rebounding from a five-week low of 13,748.94 hit earlier in the session.
The broader Topix added 0.2 percent to 1,150.13 in relatively thin trade, with 2.64 billion shares changing hands.