FOX Business: Capitalism Lives Here

U.S. equities ended a volatile day sharply lower as traders lost hope that Congress will be able to pass legislation to avert a default before the deadline.

Today's Markets

According to preliminary calculations, the Dow Jones Industrial Average fell 135 points, or 0.88%, to 15166, the S&P 500 dipped 12.1 points, or 0.71%, to 1698 and the Nasdaq Composite slumped 21.3 points, or 0.56%, to 3794.

Traders had information to parse through on two front Tuesday: corporate American and political America. 

In Washington, D.C., traders initially grew more hopeful that lawmakers would strike an agreement to raise the debt ceiling before the October 17 deadline the Treasury Department imposed. However, uncertainty mounted as the day went on. Indeed, Dan Greenhaus, chief market strategist at BTIG, remarked that he has "absolutely no idea" whether a debt deal will be passed by Thursday, underscoring the still tense mood on Wall Street. 

Analysts at Potomac Research Group warned in a note to clients that legislation could run into two major hurdles. First, since a bill is likely to originate in the Senate, it could face up to two filibuster attempts. Second, a more worrisome, according to PRG, is the high chance the bill will face stiff resistance by Republicans in the House of Representatives.

Adding to the increasingly gloomy sentiment, Senate Majority Leader Harry Reid said credit ratings companies were considering a downgrade on U.S. debt. Moody's Investor Service and Fitch Ratings both declined to provide details on their plans, while Standard & Poor's didn't immediately respond to a FOX Business request for comment. 

Citigroup (C) posted adjusted third-quarter earnings of $1.02 a share, missing estimates by two cents. Adjusted revenues of $18.2 billion also came in shy of expectations of $18.6 billion. Johnson & Johnson (JNJ) unveiled adjusted third-quarter earnings of $1.36 a share, topping estimates by four cents. Revenues of $17.6 billion also beat forecasts of $17.4 billion. Coca-Cola (KO) revealed adjusted third-quarter profits of 53 cents a share on sales of $12.03 billion, matching Wall Street’s estimates.

On the economic front, the New York Federal Reserve’s manufacturing index fell in October to 1.52, widely missing estimates the gauge would rise to 7 from 6.29 in September. Readings above 0 point to expansion in the New York manufacturing sector, while those below indicate contraction. The reading is the lowest since May.

In commodities, U.S. crude oil futures dipped 91 cents, or 0.89%, to $101.49 a barrel. Wholesale New York Harbor gasoline fell 0.4% to $2.656 a gallon. Gold tumbled $15, or 1.2%, to $1,262 a troy ounce. 

Follow Adam Samson on Twitter @adamsamson.