S&P 500 and Nasdaq Composite Extend Weekly Losses to 3% Amid Looming Federal Government Shutdown

Barry Adams
20 Dec, 2024
New York City

Selling resumed on Wall Street after investors debated the Fed's latest interest rate outlook and the evolving political chaos in Washington. 

The S&P 500 index decreased 0.2%, and the Nasdaq Composite declined 0.6%, and benchmark indexes extended weekly losses to 3%. 

Market sentiment turned negative after the Republican Party-backed federal government spending bill failed to pass by a wide margin in the House. 

The U.S. House members have few hours left to pass the federal government's spending bill and raise the debt limit to avert a total shutdown as early as today. 

The proposed spending bill was rejected by 38 members of the Republican Party and failed to pass the House with 235 members voting against it and 174 in favor. 

On the economic front, investors reviewed the latest update of the PCE price index, the preferred measure of inflation by policymakers. 

The Personal Consumption Price Index in November accelerated as expected. 

The annual PCE Price index increased to 2.4% from 2.3% in October, and the core index, which excludes food and energy, held steady at 2.8%, the U.S. Bureau of Economic Analysis reported Friday. 

In December, the Federal Reserve revised its 2025 estimate of PCE inflation to 2.5% from 2.1% and core PCE price inflation to 2.5% from 2.2% previously estimated after the policy meeting in September. 

 

U.S. Indexes and Treasury Yields

The S&P 500 index decreased 0.3% to 5,853.26, the Nasdaq Composite dropped 0.6% to 19,261.23, and the Russell 2000 index declined by 0.2% to 2,205.09. 

The yield on 2-year Treasury notes edged lower to 4.29%, 10-year Treasury notes inched down to 4.54%, and 30-year Treasury bonds increased to 4.73%.

WTI crude oil decreased $0.29 to $69.08 a barrel, and natural gas prices edged up 7 cents to $3.65 a thermal unit.

Gold increased by $11.04 to $2,604.74 an ounce, and silver fell by $0.08 to $28.93. 

The dollar index, which weighs the US currency against a basket of foreign currencies, edged lower by 0.22 to 108.15.

 

U.S. Stock Movers 

FedEx Corp. increased 6.8% to $294.30 after the parcel delivery company reported its quarterly results and announced spinning off its freight business. 

Revenue in the fiscal second quarter was flat at $21.96 billion from $22.16 billion; net income edged down to $741 million from $900 million, and diluted earnings per share eased to $3.03 from $3.55 a year ago. 

The company repurchased 3.7 million of its own shares for $1 billion in the quarter, and about $3.1 billion remained available under the current stock repurchase program. 

FedEx said it plans to separate its freight business as a publicly listed company and complete the transaction over the next 18 months. 

The parcel delivery company estimated fiscal 2025 revenue to be flat compared to the previous estimate of an increase in single-digit percentage. 

The company estimated diluted earnings per share before the retirement plan-related adjustments. between $16.45 and $17.45, compared to the previous estimate between $19.0 and $20.0. 

Nike Inc. declined 4.8% to $72.83 after the athletic shoemaker reported fiscal second quarter results. 

Revenue in the fiscal second quarter ending in November decreased 8% to $12.4 billion from $13.4 billion, net income fell 26% to $1.2 billion from $1.6 billion, and diluted earnings per share eased to 78 cents from $1.03 a year earlier. 

Nike's sales have been affected by the lack of new products and higher levels of discounting, which are also affecting gross margin. 

The company estimated gross margin to decline between 3.0% and 3.5% in the holiday quarter.