U.S. Stocks Finish Mostly Lower as President Trump Set to Declare National Emergency
U.S. stocks headed for losses Thursday as President Trump prepared to sign a new budget deal to avoid a second government shutdown. In signing the legislation, the president will also declare a national emergency to build his proposed border wall with Mexico, according to Senate Majority Leader Mitch McConnell.
Stocks Fail to Rally After Volatile Open
The Dow Jones Industrial Average declined by as much as 235 points during the morning session. It would later pare losses and settle down 103.88 points, or 0.4%, at 25,439.39.
The broad S&P 500 Index declined 0.3% to 2,745.73, with six of 11 primary sectors contributing to the declines. Shares of consumer staples companies fell 1.2%, while financials declined 1% on average. Losses in these sectors offset modest gains for energy and communication services companies.
Meanwhile, the technology-focused Nasdaq Composite Index climbed 0.1% to close at 7,426.95.
Trump to Declare National Emergency
Senate Majority Leader Mitch McConnell has confirmed that President Trump will sign new budget legislation that will prevent another government shutdown and declare a national emergency to unlock the remaining funds to build a wall along the U.S.-Mexico border.
“He’s prepared to sign the bill, he will also be issuing a national emergency declaration at the same time,” McConnell said, adding that the Senate will begin voting on the legislation beginning at 3:30 p.m. ET.
Trump is declaring a national emergency because the proposed budget deal includes funding for only 55 new miles of physical barriers. Under the proposed bill, the 55-mile wall would be an extension of existing infrastructure and not the steel barrier Trump has vowed to build.
“We have got a lot of funds for a lot of other things,” Mr. Trump said Wednesday, according to The Wall Street Journal. “With a wall, they want to be stingy. We have options that most people don’t really understand.”
Retail Sales Raise Alarm Bells
Stocks sold off Thursday morning after government data showed an unexpected drop in retail sales in December, a month known for lavish holiday spending. Receipts at retail stores plunged 1.2%, confounding expectations for a 0.2% gain, the Commerce Department said. It was the biggest monthly drop since September 2009. Excluding auto sales, receipts fell 1.8%, official data showed.
The report was released just two days after the New York Federal Reserve published startling data on auto delinquency. The data showed that a record 7 million Americans are 90 or more days behind their auto loan payments. That’s a million higher than the total at the end of 2010, which was just after the financial crisis. At the time, the unemployment rate was 10% compared to the present rate of 4%.
A combination of declining retail sales and rising auto delinquencies cast a dark shadow over the domestic recovery. This is further magnified by the fact that more than 70% of gross domestic product is driven by consumer spending.
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