Wall Street declines on debt ceiling impasse

Dow Jones: 12,240.11 (–62.44) Nasdaq: 2,766.25 (+1.46) SP 500: 1,300.67 (–4.22)

US STOCKS fell yesterday, as lawmakers indicated they were no closer to reaching an agreement to increase the debt ceiling and avoid a default.

The Dow Jones Industrial Average erased an advance of as much as 82 points after Senate Majority Leader Harry Reid said House Speaker John Boehner’s plan to cut the deficit would be defeated in the Senate.

“There is no positive news on the debt discussions out of Washington,” Brad Pleimann, head of equity trading at Piper Jaffray in Minneapolis, wrote in an e-mail.

Republican House leaders expressed optimism their debt- ceiling measure would pass. If it does, Mr Reid said he plans to bring Mr Boehner’s legislation to the Senate floor and “it will be defeated”, paving the way for Senate votes this weekend on a possible compromise.

The SP 500 rallied as much as 0.9 per cent earlier as Labor Department figures showed jobless claims declined by 24,000 to 398,000 last week.

DR Horton advanced 2.6 per cent to $11.90 after reporting a third-quarter profit of 9 cents a share.

Before the jobless claims data was released, stock futures dipped after Exxon reported its results. The company’s second quarter profit fell short of analyst estimates as a slump in international refining profits limited the benefit of higher oil prices. Net income rose to $2.18 a share from $1.60 a share a year earlier. Exxon fell 2.2 per cent to $81.46.

DuPont increased less than 0.1 per cent to $52.30 after raising its full-year earnings forecast.

Technology companies rose 0.1 per cent for the biggest gain among groups in the benchmark index for US equities.

Cisco gained 2 per cent to $16.01 for the biggest increase in the Dow.

Akamai rose the most in the SP 500, rallying 14 per cent to $7.35.

Sprint Nextel retreated 16 per cent to $4.34 after the third-biggest US mobile-phone carrier reported a loss for the 15th consecutive quarter as more customers dropped their contracts.

BMC Software fell 8.8 per cent to $44.61 after the maker of business software said sales were down missing the average estimate predicted by analysts in a Bloomberg survey. – (Bloomberg)