US shares pause on budget worries

US stocks closed near unchanged yesterday, a day after Wall Street’s best rally since March, as the oncoming debt ceiling deadline overshadowed strong earnings from Apple.

Apple hit another all-time high one day after the maker of the iPhone and iPad reported quarterly revenues that far exceeded expectations.

The stock jumped 2.7 per cent to $386.90 but, overall, investors sat on their hands amid the unresolved debt ceiling crisis in Washington. The White House and Congress were negotiating a deal to raise the US debt ceiling before a looming default on 2 August.

The Dow Jones industrial average lost 15.44 points, or 0.12 per cent, to 12,571.98. The Standard & Poor’s 500 Index shed 0.87 points, or 0.07 per cent, to 1,325.86. The Nasdaq Composite Index dropped 12.29 points, or 0.43 per cent, to 2,814.23.

Technology shares were lower, with Yahoo tumbling 7.6 per cent to $13.48 after reporting lacklustre results and Microsoft dropping 1.7 per cent to $27.06 ahead of its quarterly report today.

Financials was the best performing sector, boosted by a 4.4 per cent rise in US Bancorp to $26.14.

The Midwestern regional bank said second-quarter net income rose by 57 per cent. The KBW Bank index climbed 1.5 per cent.

Sovereign debt problems in Europe and the protracted political battle over increasing the US debt ceiling have weighed on stocks. On Tuesday, there was progress toward a $3.75bn US budget deal, prompting a late rally, but a final resolution remained elusive.

European Union leaders must find a convincing solution to Greece’s debt crisis at a summit on Thursday or the global economy will pay the price, the head of the European Commission said in an unusually somber warning.

On the US economic front, existing home sales fell unexpectedly to a seven-month low in June as cancellations of pending contracts surged, according to the National Association of Realtors.

Volume was light with about 6.3bn shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the daily average of 7.48bn.

Advancing stocks outnumbered decliners on the NYSE by 1,658 to 1,314, while losers beat winners 1,532 to 1,023 over on the Nasdaq index.