* Government shutdown enters second day; no end in sight
* ADP report shows fewer jobs added in Sept than expected
* Monsanto drops in premarket after fourth-quarter loss
* Futures down: Dow 100 pts, S&P 11.1 pts, Nasdaq 15.5 pts
By Ryan Vlastelica
NEW YORK, Oct 2 U.S. stock index futures pointed
to a lower open on Wednesday as a partial government shutdown in
Washington entered a second day, adding to concerns over how
soon a political compromise would be reached.
There were few signs that Congress was making progress in
agreeing on a spending bill that would reopen operations. The
Democratic-led U.S. Senate voted Tuesday to kill Republicans'
latest attempts to modify an emergency funding bill, and sent a
"clean" measure back to the House of Representatives that would
extend funding for government agencies until Nov.
U.S. Treasury Secretary Jack Lew said late Tuesday the
Treasury had started using its final tools to push back the date
when the government will run out of legal borrowing authority.
The shutdown's impact on economic growth and market
volatility will likely increase the longer it continues. Market
participants are also watching the situation for an indication
of how an impending debate on the debt ceiling might play out.
That issue is considered far more important for the economy, as
it could result in an unprecedented debt default if not passed.
"There's a sense that the debate isn't going to end soon.
Yesterday's rally was driven by a hope this wouldn't last, but
that hope is diminishing," said Oliver Pursche, president of
Gary Goldberg Financial Services in Suffern, New York.
Sectors tied to the pace of economic growth, including
financials and materials, were the most volatile amid the
uncertainty. Citigroup Inc fell 1.1 percent to $48.05 in
Data released Wednesday by a payrolls processor showed U.S.
private employers added 166,000 jobs in September, below
expectations for 180,000 jobs. Investors may place more weight
than usual on the report as government data will not be released
during the shutdown. Friday's key payroll report will be delayed
if no deal is reached by then.
S&P 500 futures fell 11.1 points and were below fair
value, a formula that evaluates pricing by taking into account
interest rates, dividends and time to expiration on the
contract. Dow Jones industrial average futures fell 100
points and Nasdaq 100 futures sank 15.5 points.
The S&P 500 has gained less than 0.2 percent over the
past two sessions, a slight move that masks the volatility seen
this week. Wall Street plunged on Monday as the deadline to keep
the government open approached, then rebounded Tuesday on bets
the government shutdown would be short-lived.
Wall Street has managed to avoid steep declines during
similar incidents in the past. During the federal government
shutdown from Dec. 15, 1995 to Jan. 6, 1996, the S&P 500 added
0.1 percent. During the Nov. 13 to Nov. 19, 1995, shutdown, the
benchmark index rose 1.3 percent.
"Putting aside short-term volatility, which we're certain to
experience as the shutdown continues, markets should rebound
very quickly once we get past this," said Pursche.
Up to 1 million government workers remained on unpaid leave
Wednesday as a result of the closure, with a fight over
President Barack Obama's healthcare law at the center of the
Monsanto Co reported a fourth-quarter loss that was
wider than expected, and offered a reduced outlook for 2014 even
as it said it was positioned for strong growth next year. Shares
fell 2 percent in premarket trading.
Three of the top 20 investors in Microsoft Corp are
lobbying the board to urge Bill Gates to step down as chairman
of the software company he co-founded 38 years ago, according to
people familiar with matter.
Shares of Alcoa Inc fell 2.8 percent to $7.94 in
premarket trading after Deutsche Bank downgraded the stock to
"sell" from "hold." The firm upgraded Barrick Gold Corp
to "buy," sending the company's U.S. shares up 1.6
percent to $18.32 before the bell.