March 8, 2021

Shares Decline as Wall Street Waits for Washington

Republican and Democratic lawmakers have offered competing proposals to avoid a catastrophic default on the government’s debt. If an agreement is not reached by Aug. 2, the American government won’t have enough cash to pay all its bills.

Paul Zemsky, chief investment officer of multi-asset strategies at ING Investment Management, said a default could cause Americans to lose confidence in the economy, causing them to put off major purchases such as buying cars and homes.

“Anything that shakes confidence right now is just bad for the economy,” Mr. Zemsky said. “And this is just a big confidence-shaker.”

The Dow Jones industrial average fell 91.50 points, or 0.73 percent, to 12,501.30, its third straight day of losses. The Standard Poor’s 500-stock index fell 5.49 points, or0.41 percent, to 1,331.94.

The Nasdaq composite edged down 2.84 points, or 0.10 percent, to 2,839.96. But technology companies generally rose after Broadcom raised its revenue forecast for the third quarter on improving demand for its chips. Broadcom rose 10 percent, and its rivals Advanced Micro Devices and Texas Instruments each edged up about 1 percent.

Strong earnings from Apple, Microsoft and other major technology companies have made those stocks the market’s best performers since the market hit a low in mid-June. The Nasdaq is up about 8 percent since June 15, while the Dow and the S.P. 500 are up about 5 percent.

More than half of the Dow’s decline on Tuesday came from 3M. The stock fell 5.3 percent, the most of the 30 companies that make up the Dow average. The industrial giant, which makes Scotch tape, medical equipment and many other products, said the disaster in Japan and sinking demand for LCD televisions hurt its results. The company makes a kind of film that is used in producing the flat-screen TVs.

Since it makes so many kinds of products, investors often see 3M’s results as an indicator of how the whole American manufacturing industry is doing.

UPS, the world’s largest package delivery company, fell 4 percent after warning that the “uneven economic environment” could affect its results. Its main competitor, FedEx, fell 1 percent.

United States Steel also said it was seeing uneven economic conditions. The stock fell 9 percent after the company predicted that its earnings could fall in the third quarter.

AK Steel Holding fell 17 percent, the most of any company in the Standard Poor’s 500 index, after the company said it expects shipments to decline in the third quarter because of higher costs for raw materials.

Netflix fell 6 percent. The DVD rental and video streaming company’s sales missed analysts’ expectations late Monday. The company also said recent price changes could discourage some potential customers from subscribing.

Bond yields fell slightly, pushing prices higher. The yield on the 10-year Treasury note fell to 2.96 percent from 3.00 percent late Monday. The dollar fell broadly, while gold stayed near a record high.

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