Stocks Drop on Budget Debate, Wal-Mart weighs

U.S. stocks dropped on Wednesday, with the S&P 500 index recording its longest decline since December, as a possible government shutdown overrode better-than-forecast economic reports.The Dow industrials lost 61.33 points , or 0.40%, to 15,273.26. The S&P 500 index shed 4.65 points, or 0.27%, to 1,692.77. The Nasdaq Composite declined 7.16 points, or 0.19%, to 3,761.10.

Americans stepped up purchases of new homes in August after cutting back in July, suggesting that higher mortgage rates are not yet slowing the housing recovery. Sales of new homes increased 7.9 percent last month to a seasonally adjusted annual rate of 421,000, the Commerce Department said Wednesday.

Wal-Mart Stores Inc. WMT -0.05% , scrambling to right the damage that was done after a Bloomberg News report said it’s cutting orders to reduce inventory, denied the report and shot back to say the article “is completely false.”

JPMorgan Chase & Co is in talks with government officials to settle federal and state mortgage probes for $11 billion, according to published reports. The Associated Press, and then the Wall Street Journal, said on Wednesday afternoon that the settlement could include $7 billion of cash and $4 billion of relief for customers.

Latin America’s growth outlook is shaky and a delay in pulling back economic stimulus in the United States shows the Federal Reserve is mindful of the impact its actions can have on other countries, an International Monetary Fund official said on Wednesday.