(USA TODAY) -- Stocks were sharply lower on Wall Street as investors braced for a potential government shutdown.
Dow Jones industrial average was off about 100 points, or 0.7%, after
being down more than 170 points earlier in the session. The benchmark
Standard & Poor's 500 index was off 0.5% and the Nasdaq composite
was down 0.3%.
Markets are under pressure as a budget battle in Washington threatens the first government shutdown in 17 years. Congress has until a midnight deadline to avert the crisis.
the fact that Wall Street has gone through prior budget battles in
recent years, the chronic inability of lawmakers to compromise on fiscal
matters and their tendency to squabble right up to key deadlines has
investors on edge once again. It is also causing volatility to spike.
rancorous debate in Washington does little to generate investor
confidence," notes Tobias Levkovich, an investment strategist at
The political dysfunction coincides with the last
trading day of the third quarter and ahead of a spate of market-moving
headlines in coming days and weeks, including soon-to-be-released
third-quarter corporate earnings reports, another fight mid-month in the
nation's capitol over raising the debt ceiling, and the Federal
Reserve's next policy meeting near the end of October.
to the hit to investor confidence if a government shut down occurs, a
shutdown would cause many government workers to be furloughed, which
will likely weigh on economic growth and hurt corporate profitability in
the final three months of the year, warns Sam Stovall, chief equity
strategist at S&P Capital IQ.
Stovall cites the "continued uncertainties from Washington" as a "headwind" for stocks.
U.S. government will reach its borrowing limit, or debt ceiling, on
Tuesday. If Congress doesn't raise that limit, the government won't be
able to pay all its bills and some 800,000 of the 2.1 million federal
employees will not go to work.
Global stocks were under
pressure also Monday as the U.S. budget battle dominated the news.
Japan's Nikkei 225 index fell 2.1% to 14,455.80 and Hong Kong's Hang
Seng index dropped 1.5% to 22,859.86.
Markets in Europe
were further exercised by renewed political crisis in Italy, where
former prime minister Silvio Berlusconi said over the weekend that he
will push for snap elections. A confidence vote on Prime Minister Enrico
Letta's administration is due Tuesday. Italy's FTSE MIB index was down
Markets across Europe fell, as Britain's FTSE 100 dropped 0.7 and Germany's DAX index fell 1.0%. France's CAC 40 was down 1.3%.
oil for November delivery fell 95 cents to $101.91 per barrel in
electronic trading on the New York Mercantile Exchange.
On Friday, the Dow fell 0.5%, the S&P 500 dropped 0.4% and the Nasdaq lost 0.1%.