Congressional Strife Hits Stocks in Choppy Trade

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Published September 30, 2013

| FOXBusiness

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Wall Street fell sharply on Monday as a seemingly endless back-and-forth on Capitol Hill ratcheted-up the chances of a government shutdown.

Today's Markets

As of 3:15 p.m. ET, the Dow Jones Industrial Average tumbled 142 points, or 0.93%, to 15115, the S&P 500 dropped 12.3 points, or 0.73%, to 1679 and the Nasdaq Composite slumped 16 points, or 0.42%, to 3765. 

The Senate passed a continuing resolution to avert a midnight government shutdown, striking House amendments that would have delayed the enactment of ObamaCare by one year and repealed the medical device tax. The legislation now moves back to the House for consideration.

However, it appeared as though the Republican-controlled House would once again try to add language that would impact ObamaCare -- President Barack Obama's signature health-care law. Sources told Fox News the body may look to delay the individual mandate -- a cornerstone of the legislation -- by a year. Senate Majority Leader Harry Reid has already said that will face sure demise in the Democratic-controlled Senate. 

"The past forty-eight hours have seen a significant rise in the developed-markets political risk temperature, with a U.S. government shutdown now considerably more likely and eurozone political risks on the rise," analysts at Citigroup warned clients late Sunday. 

Nomura also began ringing the warnings bells, telling its clients: "It is still possible that some sort of compromise can be reached before the existing authorization expires at
midnight on Monday. However, developments over the week end suggest that a government shutdown, starting on Tuesday, now appears to be the most likely outcome."

The first shutdown since 1996 would likely have limited economic impacts, according to several Wall Street economists. However, hundreds of thousands of so-called "non-essential" government workers would be furloughed and many services would be temporarily halted. 

There are also concerns among analysts that the gridlock seen in Congress is likely prelude to a messy fight to raise the debt ceiling before the October 17 deadline. The affects of breaching the debt ceiling would likely be far more severe and uncertain than a shutdown, traders  and economists said. 

Meanwhile, tension mounted in Italy -- a hotspot during the years-long eurozone debt crisis. Prime Minister Enrico Letta called for a confidence vote in Parliament in the hopes of shoring up support for his government -- but there was the potential for the 17-member currency bloc's No. 3 economy being thrown back into deep political turmoil. 

On the economic front, the Institute for Supply Management-Chicago‚Äôs gauge of manufacturing activity in the U.S. Midwest rose to 55.7 in September from 53 the month prior, exceeding expectations it would edge up to 54. Readings above 50 point to expansion, while those below indicate contraction.

In commodities, U.S. crude oil futures dipped $1.37, or 1.3%, to $101.49 a barrel. Wholesale New York Harbor gasoline slid 1.1% to $2.632 a gallon. Gold fell $6.60, or 0.5%, to $1,333 a troy ounce. 

Elsewhere, Macy's (M) said it plans to hire 83,000 seasonal workers during the holidays, up by 3,000 from 2012. 

Foreign Markets

The Euro Stoxx 50 slid 1.3% to 2882, the English FTSE 100 dipped 0.89% to 6455 and the German DAX fell tumbled 1.1% to 8568. 

In Asia, the Japnese Nikkei 225 plummeted 2.1% to 14456 and the Chinese Hang Seng sold off by 1.5% to 22860.

 

URL

http://www.foxbusiness.com/markets/2013/09/30/wall-street-haunted-by-fiscal-fears-stocks-plummet/