S&P 500 down 8 at 2,444
Dow Jones off 88 at 21,812
Manufacturing activity hits a two-month low
PVH Corp tops expectations with earnings
A threat by Donald Trump not to agree to lift the debt ceiling for government had markets in a funk on Wednesday.
The President's refusal to raise the ceiling would essentially leave the government unable to pay for basic services or meet its payroll obligations.
The move was seen as a gambit to rustle up some funding from law-makers for Trump's pet project of a Mexican version of the Berlin Wall.
Blue-chip stocks gave up a hefty proportion of yesterday's handsome gains.
The S&P 500 closed at 2,444, down 8 and the Dow Jones industrial average closed at 21,812, down 88.
Investors were also reticent to chase yesterday's gains higher as the central bankers' symposium in Jackson Hole is due to start tomorrow.
In after-hours trading, PVH Corp (NYSE:PVH), which owns the Calvin Klein brand, was wanted as its earnings topped expectations.
The shares rose 3.8% to US$124.60.
Mid-session: Stocks pare losses
Stocks have pared initial losses, despite some indifferent Purchasing Managers' Index (PMI) data.
US manufacturing activity hit a two-month low in August as production and new orders slowed.
The Markit’s flash reading of the purchasing managers’ index fell to 52.5 from 53.3 in July, missing analysts’ estimates of 54.5; however, it remained above the 50 level that signals expansion.
The services PMI, on the other hand, jumped to 56.9 from 54.7, ahead of forecasts of 55.0.
The composite PMI, which combines manufacturing and services, edged up to 56.0 from 54.6.
“The US economic growth story remained a tale of two sectors in August,” said Rob Dobson, director at IHS Markit.
“Nonetheless, the acceleration signalled for the economy as a whole suggests that GDP growth is still gaining momentum during the third quarter.
“With new order inflows also strengthening and job creation equalling its best pace in the year-to-date, economic growth should remain on course to outperform relative to the second quarter.”
In lunchtime trading the Dow Jones average had recovered to 21,860, down 40 points, while the S&P 500 was down 4 at 2,448.
Clothing retailer Express Inc (NYSE:EXPR) surprised the market with an upbeat second quarter trading update.
The shares rose 245 to US$6.8039 as the company said like-for-like sales and earnings were at the top end of the company's guidance range.
The company still posted a loss of 15 cents per share, but this would have been positive earnings of one cent a share were it not for costs associated with existing Canada.
Used car online marketplace Carvana Co (NYSE:CVNA) revved two bucks higher to US$17.49 as it launched its service in Baltimore.
Open: Stocks slide as investors wonder whether President Trump will go through with his threat not to sign off on raising the government's debt ceiling
After yesterday's strong showing, investors were taking money off the table in early deals, as the big meeting in Jackson Hole draws closer.
The Dow Jones, which fell just shy of posting a 200 point gain yesterday, gave back 75 points at 21,825 while the broader-based S&P 500 was down 8 at 2,445.
On the macro-economic front, sales of newly-constructed homes dipped in July to a seasonally adjusted annualized rate of 571,000 units from 630,000 in June.
Meanwhile, President Trump has threatened to effectively shut down the US government unless he secures funding for his controversial border wall with Mexico.
“This is signature Donald Trump. We think this is basically a bluff by Trump to get his ‘Great Wall’ back on the agenda and show some political rebellion following his foreign policy capitulation in Afghanistan," opined Jasper Lawler, head of research at London Capital Group.
“Trump wouldn’t want a government shutdown because he feels compelled to put across the image of America 'winning' under his Presidency. A government shutdown symbolises failed leadership,” in Lawler's view.
“We think markets will probably call Trump’s shutdown bluff. This implies further recovery in equities so long as central bankers avoid any hawkish surprises at Jackson Hole,” Lawler added.
Lukman Otunuga, a research analyst at foreign exchange trading platform operator FXTM, reckons “a sense of anticipation can be felt across the financial markets ahead of the Jackson Hole Symposium later this week.”
“Financial heavyweights such as Mario Draghi and Janet Yellen will be in the spotlight, with markets closely scrutinizing their speeches for fresh insight on the outlook for monetary policy and interest rates,” Otunuga added.
Stocks slip as markets look to central banker meeting - https://t.co/fiscEvmIeN
— Lukman Otunuga (@Lukman_FXTM) August 23, 2017
Leading the retreat on the NYSE was La-Z-Boy Incorporated (NYSE:LZB) after it reported fiscal first quarter earnings per share of 24 cents, down from 28 cents a year earlier and well below the 29 cents analysts had been expecting.
Like-for-like sales for the La-Z-Boy Furniture Galleries network were up 0.7% year-on-year, but that did not stop the shares losing almost a fifth of their value in early deals.
In comparison, the 5.8% fall on Lowe's Companies Inc (NYSE:LOW) seems relatively sedate.
READ Lowe’s heads lower on disappointing second quarter earnings and sales
Lowe’s earnings and sales fell short of Wall Street expectations.
The North Carolina-headquarter company also lowered its full-year profit guidance as it expects additional investment in marketing and customer service to pressurize margins.
LFL sales were a bright spot, rising 4.5% from a year earlier, beating the consensus forecast of a 4.3% rise, but sentiment towards the home improvements retailer will not have been helped by today's housing sales numbers for July.