The Dow Jones industrial average was down 59 points, or 1.1 percent, to 15,276 as of 2:15 p.m. Eastern Time. The blue chips were dragged lower by Wal-Mart after news reports that the retailer was cutting product orders due to sluggish sales.
The Standard & Poor’s 500 index was down 3 points, or 0.2 percent, to 1,694. The Nasdaq composite was down 3 points, or 0.3 percent, to 3,765.
Bloomberg News reported Wal-Mart was looking to order fewer products from its suppliers in the third and fourth quarters of this year. It’s the latest sign that Wal-Mart’s sales have been slow, following the company cutting its full-year sales forecast back in August.
A Wal-Mart spokesman called the report “completely false.”
Shares of Wal-Mart fell $1.08, or 1.5 percent, to $74.67, taking the rest of the market with it.
Worries about the economy and the growing possibility of a government shutdown also continue to weigh on investors’ minds.
The U.S. government will run out of funding on Sept. 30, unless Democrats and Republicans can agree to pass a temporary funding bill in the next few days. The Democratic-controlled Senate will vote Wednesday on the temporary measure, which will then likely head back to the Republican-led House of Representatives for debate. The funding fight is expected to go through the weekend.
The Dow and S&P 500 surged to all-time highs on Sept. 18, but have fallen four consecutive days on concerns that a government shutdown could harm the fragile U.S. economic recovery. The mood of investors has shifted from giddiness over more Federal Reserve stimulus to concern about Washington politicking.
“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 Obama fought over the debt ceiling and the budget, which ultimately led Standard & Poor’s to downgrade the credit rating of the U.S.
While the U.S., and even 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 non-defense-related spending.
The Dow went through nearly three weeks of triple-digit gains and losses during that month, a rough ride that made even hardened Wall Street traders nauseous.
“All we’re doing now is worrying,” Ablin said.
Wall Street is also looking to next Friday, Oct. 4, when investors get the September jobs report. If hiring is strong enough, the Fed could decide to start pulling back on economic stimulus at its two-day policy meeting later in the month.
At the end of its last meeting on Sept. 18, traders had expected a small cut in the Fed’s $85 billion monthly bond purchases, which are aimed at keeping long-term interest rates low to encourage borrowing. When the Fed kept its bond-buying intact, stocks soared because the decision signaled that the central bank would keep borrowing rates as low as possible.
But the Fed’s decision also left traders worried that the economy wasn’t healthy enough to grow without the Fed’s help.
Investors did get an unexpectedly positive August durable goods report on Wednesday. Orders for long-lasting manufactured goods rose 0.1 percent last month, following an 8.1 percent decline in July.
Among stocks making big moves:
JC Penney fell $1.62, or 14 percent, to $10.28, as more Wall Street analysts continued to downgrade the department store chain’s outlook. An analyst at JPMorgan Chase said JC Penney might right out of cash by next year.
Mako Surgical soared $13.32, or 83 percent, to $29.49 after medical technology company Stryker said it would buy Mako for $1.65 billion, or $30 per share.
Ascena Retail Group shares jumped $2.81, or 16 percent, to $20.14. The parent company of Lane Bryant, Dressbarn and Maurices, reported results that were significantly better than financial analysts expected in its most recent quarter.