Stocks sink as U.S. government heads toward shutdown
NEW YORK (AP) — Stocks sank Monday as Wall Street worried that a budget fight in Washington could lead to something much worse for the economy— a failure to raise the nation’s borrowing limit.
It has become all but certain that the federal government will partially shut down for the first time in 17 years Tuesday because Congress and the White House have failed to reach an agreement to fund federal spending.
But investors are looking beyond that first impasse because any hit the economy and markets should be temporary if the shutdown is short. The bigger worry is the problem with the debt ceiling, they say.
“The concern is government has become so polarized that if they cannot pass (a budget), there’s a greater chance that the debt ceiling battle will go to the brink or possibly lead to a default,” said Alec Young, global equity strategist with S&P Capital IQ.
Treasury Secretary Jack Lew said last week that the government would run out of borrowing authority by roughly Oct. 17. The last time the debt ceiling issue came up in August 2011, it led to Standard & Poor’s downgrading the United States’ credit rating and the Dow Jones industrial average went through nearly three weeks of nauseating triple-digits moves almost daily.
On Monday, the Dow dropped 97 points, or 0.6 percent, to 15,161 as of 11:55 a.m. Eastern. The Standard & Poor’s 500 slid 8 points, or 0.5 percent, to 1,684 and the Nasdaq composite dropped 10 points, or 0.3 percent, to 3,772.
