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US stocks dip on earnings; debt deadline nears

October 9th, 2013 12:57 pm by STEVE ROTHWELL, AP Markets Writer

US stocks dip on earnings; debt deadline nears

NEW YORK (AP) — Earnings news gave investors something else to focus on Wednesday as a government shutdown entered its ninth day and a potential economy-shaking federal default edged ever closer.

Stocks moved between small gains and losses throughout the morning, leaving major indexes mixed by midday. Yum Brands, the owner of KFC, Taco Bell and Pizza Hut, was the biggest decliner in the S&P 500 after its earnings fell short of Wall Street's expectations. The discount retailer Family Dollar also slumped after giving a cautious earnings forecast for next year.

The number of companies reporting third-quarter earnings is picking up this week, giving investors better insight into how corporate America is doing. Stocks have slumped this week as few signs emerged that lawmakers in Washington were moving closer to reaching a deal to resolve a budget stalemate before the Treasury runs out of money to pay its obligations next week.

"It looks like there has been some disappointment in the early earnings already," said Colleen Supran, a principal at San Francisco-based Bingham, Osborn & Scarborough, an investment adviser and asset management company. While the situation in Washington "looks more concerning by the day."

The S&P 500 index fell three points, or 0.2 percent, to 1,652 as of noon EDT (1600 GMT). The index lost 2 percent in the first two days of this week as concerns grew that politicians will fail to reach a deal before the government reaches the limit of its borrowing authority on Oct. 17.

The Dow Jones industrial average rose two points, leaving it almost flat at 14,779. The Nasdaq fell 35 points, or 0.2 percent, to 3,659.

Stocks opened modestly higher as the White House prepared to nominate Janet Yellen for the top position at the Federal Reserve.

Investors expect Yellen, who currently serves as the Fed's vice chair, to continue the aggressive economic stimulus policies championed by Chairman Ben Bernanke. President Barack Obama is scheduled to announce the appointment at the White House with Yellen and Bernanke at his side Wednesday.

Yellen's appointment "does add certainty, in the absence of certainty for stocks," said Jim Russell, a regional investment director at U.S. Bank. "It perhaps keeps a little bit of a safety net under equities for the near, or intermittent, term."

Investors will also get an insight into the Fed's thinking Wednesday when the central bank publishes minutes from its September meeting at 2 p.m. Eastern time Wednesday.

The Fed surprised investors with its decision to keep buying $85 billion of bonds every month to bolster the economic recovery. Many had predicted the central bank would cut back on its stimulus.

Yum Brands slumped $5.91, or 8.3 percent, to $65.40. Sales in China have grown weaker and the company cut its full-year earnings forecast after the closing bell Wednesday. Family Dollar fell $1.66, or 2.4 percent, to $67.83.

In government bond trading, the yield on the 10-year Treasury note rose to 2.66 percent from 2.63 percent.

In commodities, trading the price of oil dropped $2.14, or 2 percent, to $101.35 a barrel. Gold slumped $24.40, or 2 percent, to $1,300 an ounce.

Among other stocks making big moves,

— Jos. A. Bank Clothiers rose $3, or 7.2 percent, to $44.72 after saying it wants to buy rival retailer Men's Wearhouse for $2.3 billion. Men's Wearhouse soared $9.98, or 28 percent, to $45.22.

— Alcoa rose 31 cents, or 3.9 percent, to $8.25 after the aluminum maker posted a slim third-quarter profit late Wednesday, reversing a year-ago loss.


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