U.S. shutdown: No end in sight as stocks, dollar fall
(Reuters) – Major stock markets and the dollar fell on Wednesday as a U.S. government shutdown entered a second day and data showed U.S. private employers added fewer jobs than expected last month.
Equities had risen on Tuesday on hopes the first partial shutdown of the U.S. government in 17 years would be short-lived. But with no end in sight to the funding battle in Congress that triggered it, concerns grew over the economic impact of the standoff.
Market volatility will likely increase the longer the shutdown continues. Investors are also watching the situation for an indication of how an impending debate on the debt ceiling might play out, considered far more important for the economy, as it could result in an unprecedented debt default if not passed.
“There’s a sense that the debate isn’t going to end soon. Yesterday’s rally was driven by a hope this wouldn’t last, but that hope is diminishing,” said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York.
Data showing U.S. private employers added 166,000 jobs in September, lower than forecasts of 180,000 jobs, added to investor jitters. The report has taken on added significance this week as the government shutdown means Friday’s nonfarm payrolls report from the Labor Department may be delayed.
“If the numbers had come up really, really strong, perhaps people would overlook the problems in Washington. But with the numbers coming in slightly below expectations, it renews concern that the recovery could start to peter out,” said Rick Meckler, president of hedge fund LibertyView Capital Management LLC.
MSCI’s world equity index .MIWD00000PUS, which tracks shares in 45 countries, fell 0.6 percent to 382.32 after gaining 0.7 percent in the previous session.
The Dow Jones industrial average .DJI dropped 131.10 points, or 0.86 percent, at 15,060.60. The Standard & Poor’s 500 Index .SPX was down 12.54 points, or 0.74 percent, at 1,682.46. The Nasdaq Composite Index .IXIC was down 18.08 points, or 0.47 percent, at 3,799.90.
The dollar extended its losses from the previous day on expectations the shutdown will further delay the Federal Reserve’s plans to scale back its asset-purchase program.