Stocks fall as investors wait on the government
NEW YORK -- The stock market's slow bleed got a little worse Tuesday.
The decline is the result of squabbling in Washington over raising the nation's debt limit and a government shutdown that has dragged on for more than a week. Moderate losses for the stock market in the first days of the shutdown have accelerated this week as the U.S. has moved closer to an Oct. 17 deadline for lifting the government's borrowing authority.
Stocks opened flat, moved steadily lower and slumped in the final minutes of trading Tuesday. The loss added to a three-week decline that has knocked the Standard & Poor's 500 index down 4 percent since hitting a record high on Sept. 18.
Swings in the market will likely increase the closer the U.S. gets to the debt deadline without a resolution, said Randy Frederick, Managing Director of Active Trading and Derivatives at the Schwab Center for Financial Research.
"Virtually everyone expects that there will some sort of a resolution," Frederick said. "But I wouldn't be surprised if it only came right before the last minute."
The S&P 500 index dropped 20.67 points, or 1.2 percent, to 1,655.45. It was the biggest one-day drop for the index since Aug. 20. The declines were led by phone companies.
House Republicans have insisted that a temporary funding bill contain concessions on President Barack Obama's health care law. The president wants a bill to simply reopen the government, without strings attached.
Obama said he had told House Speaker John Boehner he's willing to negotiate with Republicans on their priorities, but not under the threat of "economic chaos." Speaking at a press briefing in Washington, the president warned that the U.S. risked a "very deep recession" if the debt ceiling wasn't raised.
The Dow Jones industrial average fell 159.71 points, or 1.1 percent, to 14,776.53. The Nasdaq composite dropped 75.54 points, or 2 percent, to 3,694.83.
Nervous investors also dumped short-term government debt as they worried that the standoff in Washington could jeopardize the nation's ability to pay its bills, including interest on its debt, as early as next week if Congress doesn't raise the borrowing limit.
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