Wal-Mart news story dings stocks

Traders work Wednesday on the floor of the New York Stock Exchange. The Dow Jones industrial average fell 61 points as concern about the economy and the possibility of a government shutdown continue to worry investors.

Traders work Wednesday on the floor of the New York Stock Exchange. The Dow Jones industrial average fell 61 points as concern about the economy and the possibility of a government shutdown continue to worry investors.

Thursday, September 26, 2013

NEW YORK - Wal-Mart spooked the stock market Wednesday - helping push stocks lower for a fifth straight day.

The Dow Jones industrial average fell 61.33 points, or 0.4 percent, to 15,273.26. The Dow was dragged down by Wal-Mart after a Bloomberg News report that the world’s biggest retailer is cutting orders with suppliers as unsold merchandise piles up.

Wal-Mart spokesman Dave Tovar said the report was misleading and that in some categories, the discounter was ordering more, and in other areas it was ordering less.

“This is business as usual,” Tovar said, noting that it was part of an ongoing process of managing the seasonality of the business based on consumer demand.

Wal-Mart spokesman Brooke Buchanan firmly denied that the retailer is cutting back on inventory.

The Bloomberg report is “completely inaccurate,” she said.

“Depending on the time of the year, the day, the hour, the year … there’s going to be an ebb and flow in inventory,” Buchanan said. ”“The Bloomberg piece was based on one email from one of a thousand Wal-Mart buyers to one of tens of thousands suppliers,” she said.

Wal-Mart shares fell $1.10, or 1.5 percent, to $74.65, taking the rest of the market with it.

The Standard & Poor’s 500 index fell 5 points, or 0.3 percent, to 1,692.77. Its five-day losing streak is the longest this year.

The Nasdaq composite lost 7 points, or 0.2 percent, to 3,761.10.

Worries about the economy and the growing possibility of a government shutdown also continue to weigh on investors’ minds. In just a week, the mood of investors has shifted from giddiness over more Federal Reserve stimulus to concern that that a government shutdown could harm the fragile U.S. economic recovery.

Two financial deadlines for the U.S. government loom. Congress needs to pass a funding bill to keep the government operating after Oct. 1, when the Federal government’s new fiscal year starts. There is also the issue of the nation’s debt ceiling, which needs to be raised before Oct. 17, Treasury Secretary Jacob Lew told Congress in a letter Wednesday.

The Republican-controlled House of Representatives has passed a temporary spending bill and a vote in the Democrat controlled Senate is expected later this week. However, a conflict between the two parties about funding the Affordable Care Act has yet to be resolved. Both chambers of Congress have yet to address the issue of the debt ceiling.

“The action over the last few days has been far more tied to the intractably of Congress and the president than the concerns about what the Federal Reserve is going to do next,” said Jack Ablin, chief investment officer at BMO Private Bank, which manages $66 billion in assets.

Ablin said investors have bad memories from August 2011, the last time Congress and President Barack Obama fought about the debt ceiling and the budget, which ultimately led Standard & Poor’s to downgrade the credit rating of the U.S.

Although the U.S. and Europe are in better shape two years later, there are concerns about real damage to the economy if the budget battle turns ugly. U.S. economic growth slowed considerably in the third quarter of 2011, the same quarter as the downgrade. The slowdown was caused partly by a drop in nondefense-related spending.

The Dow went through nearly three weeks of triple digit gains and losses during that month.

“All we’re doing now is worrying,” Ablin said.

Stock traders are also looking to Oct. 4, when investors get the Labor Department’s September unemployment report. If hiring is strong enough, the Federal Reserve could decide to start pulling back on its economic stimulus at a twoday policy meeting later in the month.

Information for this article was contributed by Cyd King of the Arkansas Democrat-Gazette.

Business, Pages 26 on 09/26/2013