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 The S&P 500 saw its first five-day losing streak of the year. First, the scoreboard: - Dow: 15,273.2, -61.3 -0.4%
- S&P 500: 1,692.7, -4.6, -0.2%
- NASDAQ: 3,761.1, -7.1, -0.1%
And now the top stories: - Treasury Secretary Jack Lew said October 17 would be the deadline for Congress to raise the debt ceiling. "If we have insufficient cash on hand, it would be impossible for the United States of America to meet all of its obligations for the first time in our history," Lew wrote.
- Considering the situation, it's surprising that markets are doing worse. Here's PIMCO's Mohamed El-Erian for Business Insider: "Today’s markets are comforted by two specific beliefs: if there is a government shutdown next week (not probable), it is unlikely to last for more than a very few days at most; and if the mid-October debt ceiling date is reached, Treasury will find a way to buy more time for lawmakers to get their act together."
- Durable goods orders unexpectedly climbed by 0.1% in August, beating expectations for a 0.2% decline. However, excluding transportation equipment, orders were down 0.1%; economists were looking for a gain of 1.0%. Orders of nondefense capital goods excluding aircraft (a.k.a. "core capex") rose 1.5%, versus expectations for a 2.0% increase. "With the survey evidence on capex intentions improving markedly over the past few months, we would expect to see capital goods orders and shipments increasing more rapidly soon," said Capital Economics' Paul Ashworth. "Third-quarter growth in equipment investment will be pretty weak, but the fourth quarter should be notably better."
- New home sales climbed 7.9% month-over-month in August to an annualized rate of 421,000, beating expectations for 6.6% growth. "These gains are even more impressive given the lack of inventory of new homes, which at 175k currently, is still lower than at any other point in the previous six business cycles," said Deutsche Bank's Joe LaVorgna. "Thus, it is not surprising that median prices are up +0.6% compared to a year ago."
- "Despite fears of rising interest rates crimping housing demand, the recent data has shown virtually no signs of a slowdown," added LaVorgna speaking more generally about the housing market. "Case in point, homebuyer traffic in the NAHB survey is at a nearly eight-year high and existing home sales are at the highest level since 2007. As we have written on numerous occasions, we believe the housing sector will be an important pillar of growth in the coming quarters."
- Shares of beleaguered department store chain JC Penney got obliterated today after Goldman Sachs published an extremely bearish report on the company. "In our view, a combination of weak fundamentals, inventory rebuilding, and an underperforming home department will likely challenge J.C. Penney’s liquidity levels in 3Q," said Goldman Sachs credit analyst Kristen McDuffy. "In order to safeguard against a potentially poor 4Q holiday season, it is likely that management will look to build a bigger liquidity buffer, as has been suggested by recent press reports. Although we believe this would be a prudent measure for the company, given our expectation for new capital to come in the form of additional debt (rather than equity), we believe this will be a negative catalyst for creditors." McDuffy recommended buying credit default swaps (CDS) on the the company. The stock fell by 14%.
- Don't Miss: GOLDMAN SACHS AND TEEN VOGUE: Here Are The 50 Brands That Young Women Love Most »
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