U.S. Stocks Open Lower Amid Bailout Uncertainty
NEW YORK (MarketWatch) -- U.S. stocks opened lower Wednesday, the first session of the fourth quarter, with markets remaining on edge over uncertainty about whether the controversial $700 billion financial bailout package will make it through Congress.
The Dow Jones Industrial Average was down 111 points, or 1%, at 10,736, with 20 of its 30 components opening lower, weighed down by a 3% drop in shares of Alcoa Inc. , Caterpillar Inc. and IBM .
Dow component Exxon Mobil fell 1.2% as crude oil prices slumped nearly 2%. Earlier Wednesday, the oil giant denied speculation of a profit warning.
Ahead of weekly inventory data, oil futures fell $2.05 to $98.56 a barrel. The dollar was slightly higher, and government bonds were stronger.
The S&P 500 index dipped 17 points, or 1.6%, to 1,148, while the Nasdaq Composite lost 22 points, or 1%, to 2,069.
U.S. stocks surged Tuesday -- though they didn't recover fully from Monday's tumble -- on hopes some form of the economic rescue bill will be passed in Congress after an initial defeat Monday in the House of Representatives.
The U.S. Senate is scheduled to vote Wednesday evening on its version of the historic $700 billion Wall Street rescue package, two days after the House of Representatives' stunning rejection of the original legislation.
One of the tweaks will have the deposit insurance from the FDIC raised to $250,000 from $100,000, The New York Times reported.
"Given the political capital invested by all sides, we think that ultimately a deal will be reached," said Nick Nelson, a UBS strategist in London.
The interest rate debate may also be in the spotlight as Goldman Sachs analysts say they're now expecting more rate cuts from the Federal Reserve, as well as easing by the European Central Bank.
Also gripping market attention was the Institute of Supply Management's manufacturing index for September, which is expected to show a slight contraction.
Employment dropped by 8,000 in the private sector of the U.S. economy in September, according to the ADP employment index released Wednesday. Economists were expecting the ADP index to fall 65,000 after it lost a revised 37,000 in August.
The ADP index has shown a much stronger job market this year than the government's nonfarm payroll report has. Economists expect a loss of 103,000 in nonfarm payrolls when the data are reported Friday.
Automakers also are due to report monthly auto sales for September. Ahead of those numbers, Daimler denied speculation Wednesday of a profit warning.
Boston Scientific was downgraded by Merrill Lynch.
Rio Tinto rose after Australia's competition regulator approved BHP Billiton's proposed hostile takeover. The deal still needs approval in Europe and by shareholders.
By Nick Godt