Posted: Monday, October 7th 2013 at 11:10am
Stocks fall as government shutdown drags on
By The Associated Press
NEW YORK (AP) -- Stocks opened lower on Monday as the partial shutdown of the U.S. government entered a seventh day with no sign of an agreement.
Speaker John Boehner on Sunday ruled out a vote in the House of Representatives on a straightforward bill to increase the borrowing authority of the U.S. government without concessions from President Barack Obama.
On the same day, Treasury Secretary Jack Lew said President Obama has not changed his opposition to coupling a bill to re-open the government and raise the nation's borrowing limit with Republican demands for changes in the health care law and spending cuts.
Lawmakers have until Oct. 17 to agree a deal to increase the nation's debt ceiling. Failure to strike a deal could cause the United States to miss payments on its debt. The Treasury warned last week that a default could push the economy into a downturn even worse than the Great Recession.
"Everything now is predicated on Washington," said Quincy Krosby, market strategist for Prudential. "That is what the market is focused on completely, getting a deal done to avoid a default."
The Dow Jones industrial average fell 100 points, or 0.7 percent, to 14,972 in early trading. The Standard & Poor's 500 index dropped nine points, or 0.5 percent, to 1,681. The Nasdaq composite fell 16 points, or 0.4 percent, to 3,791.
The losses were broad. All ten sectors in the S&P 500 dropped, led by banks and other financial companies.
Until now, the stock market has mostly moved sideways since the shutdown began at the start of the month, indicating that investors still expect lawmakers to come up with a deal. The S&P 500 is flat since the start of the month.
In government bond trading, the yield on the 10-year Treasury note fell to 2.62 percent from 2.65 percent. The yield has fallen close to its lowest in two months as investors bought Treasuries on concern that U.S. economic growth will slow as the budget impasse drags on.
In commodities trading, the price of oil dropped $1.46, or 1.4 percent, to $102.36 a barrel as crude production in the Gulf of Mexico got back on track after a storm system passed through. The price of gold rose $8.60, or 0.7 percent, to $1,318.60 an ounce.
Among stocks making big moves:
- Apple rose $7.77, or 1.6 percent, to $490 after a Jefferies analyst raised his rating and price target on the stock, saying improving margins should help the business until the launch of the iPhone 6.
- Alcoa fell 11 cents, or 1.4 percent, to $7.85 after a Stifel Nicolaus analyst lowered his price target for aluminum producer, citing a recent drop in aluminum prices. The company reports earnings on Tuesday.
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