Stock Futures Tumble as Fiscal Uncertainty Mounts


FOX Business: Capitalism Lives Here

U.S. stock-index futures took a beating as Congress remains deadlocked in negotiations to stave off a government shutdown and political turmoil once again flared up in Europe.

Continue Reading Below

Today's Markets

As of 8:20 a.m. ET, Dow Jones Industrial Average futures tumbled 132 points to 15063, S&P 500 futures dropped 14.8 points to 1671 and Nasdaq 100 futures slumped 25.3 points to 3198.

Over the weekend, the House amended a Senate-backed continuing resolution to keep the federal government funded through December 15, delay the enactment of ObamaCare by a year and repeal the medical device tax. The Democratic-controlled Senate, which did not meet on Sunday, vowed to shoot down the Republican-powered legislation that would affect President Barack Obama's signature health-care law. If Congress can't craft an agreement, the government will shut down at 12:00:01 a.m. ET on October 1.

"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 reveals its gauge of manufacturing conditions in the U.S. mid-Atlantic region at 9:45 a.m. ET. Economists are expecting a reading of 54 for September from 55.7 in August.

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 (NYSE: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.

What do you think?

Click the button below to comment on this article.