Stocks slide on government shutdown fears

CNN
Tuesday, September 24, 2013 - 10:11am

The biggest threat to the 2013 rally may be Washington, D.C.

Investors are weighing the possibility that the U.S. government might shut down on October 1st. But even if a shutdown is avoided, the bigger concerns is whether Congress will raise the debt ceiling before the drop-dead deadline of October 18. If that doesn't happen, the government risks defaulting on its debt. Another credit rating downgrade could be in the cards too.

The Dow Jones Industrial Average, the S&P 500 and the Nasdaq were all trading slightly lower Tuesday morning. Stocks have declined for the past three days.

Housing continues to rebound: Positive signs from the housing market weren't enough to boost stocks. Home prices continued to climb in July, according to S&P/Case-Shiller data.

Homebuilder Lennar reported a boost in quarterly earnings and revenue compared to the year-earlier quarter, with a significant increase in new-home orders. KB Home also beat expectations for its earnings.

What's moving: Facebook shares rose nearly 4% and hit a new all-time high. The stock, which only recently topped its previous record of $45 from its IPO day, is now flirting with $50 a share. An analyst at Citigroup upgraded the stock to a "buy." There are also reports that China may soon loosen some of its Internet restrictions, which could pave the way for Facebook to enter the world's most populous market.

Chip equipment maker Applied Materials announced a $29 billion merger with Tokyo Electron Limited "to create a global innovator in semiconductor and display manufacturing technology." Shares of Applied Materials rose on the news.

Shares of Red Hat, a business software maker, fell due to concerns about sales growth for the rest of the year.

Carnival's stock plunged after the cruise operator reported a drop in profits.

BlackBerry announced late Monday that its largest shareholder, Fairfax Financial, was leading a group to acquire the troubled company for $9 a share. Blackberry shares edged lower Tuesday and remain below the $9 mark.

European markets were in positive territory in afternoon trading. The latest German business sentiment data shows confidence continued to improve in September. Asian markets ended the day with small losses.

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