Wall Street opened lower on Thursday, following European markets downward, as investors looked beyond Washington’s last-minute deal to avert a debt default to focus on corporate news and the Federal Reserve.
In early trading the Standard & Poor’s 500-share index was down 0.3 percent, the Dow Jones industrial average fell 0.6 percent and the Nasdaq composite was 0.3 percent lower.
Interest rates on ultra-short-term United States government debt, which had ballooned in recent days as fears of a default grew, fell sharply.
The euro zone’s blue-chip Euro Stoxx 50 index was down 0.6 percent in afternoon trading, retreating from a two-and-a-half-year high hit on Wednesday.
“People are ‘selling the news,’ ” said David Thebault, head of quantitative sales trading at Global Equities. “The agreement was priced in stocks, and now that it’s behind us and political risk has been removed, investors are offloading portfolio protection.”
Earlier Thursday, President Obama signed into law a last-minute agreement in Congress to end a partial government shutdown and pull the country back from the brink of a debt default that would have had damaging ripple effects across the world.
The deal provides merely a temporary fix, however, as it finances the federal government until only Jan. 15 and raises the debt ceiling until Feb. 7, with the prospect of another bitter budget fight and shutdown early next year.
“Markets are back to business, the U.S. shutdown was just noise at the end,” said Vincent Ganne, analyst at FXCM. “The spotlight is now on company news as well as on the Fed’s next policy meeting and the outlook for its quantitative easing program.”
Around Europe, the Britain’s FTSE 100 index was down 0.3 percent, Germany’s DAX index down 0.7 percent, and France’s CAC 40 down 0.5 percent. Asian indexes closed mixed earlier.
Fears that the Treasury Department might delay paying debt holders led some large money market funds to shed holdings of Treasury bills that mature in the second half of October into the first half of November, which were seen as most vulnerable if the government could not increase its borrowing capacity in time. The unease in holding these T-bills catapulted their interest rates to levels not seen in five years.
Their yields were briefly double the yields on two-year Treasury notes. In early trading on Thursday, some confidence returned to the T-bill sector. The rates on the October and November issues fell as much as 20 basis points to their lowest since the end of September.
On the earnings front, shares in I.B.M. fell 6 percent after a drop in hardware sales in the latest quarter reinforced concerns about the company’s ability to grow.
Verizon Communications posted stronger-than-expected third-quarter earnings and revenue on strong wireless growth, sending its shares up 2.3 percent.
Also, shares in food giant Nestlé rose 2.9 percent after the company said an improvement in emerging market demand helped increase sales growth in the third quarter, reassuring investors worried by recent negative news from European rivals Danone and Unilever.
Carrefour, the world’s No. 2 retailer, rose 3 percent after the group said sales at its French hypermarkets returned to growth in the third quarter while China sales also improved.
Shares in KPN, the Dutch telecom, were among the biggest losers in Europe, sinking 9 percent after America Movil dropped a plan to increase its stake in the company, and said it had not decided whether to keep its current position in the firm.
The news dampened consolidation hopes for the sector and knocked shares lower, with Orange down 2.3 percent and Deutsche Telekom down 2 percent.