Stocks fall as government shutdown settles in
Stocks ended lower Wednesday as traders fretted over the possibility of a protracted government shutdown. Wall Street made it clear on that the longer the government shutdown drags on, the more its bankers worry about significant damage to the economy.
Wall Street to Washington: end the shutdown and move on.Skip to next paragraph
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The U.S. stock market ended lower Wednesday as traders, Europe's central banker and Wall Street CEOs urged Congress to stop the two-day government shutdown that has closed national parks, put hundreds of thousands of federal employees on furlough and forced President Barack Obama to cancel an overseas trip.
Wall Street made it clear on that the longer the budget fight drags on, the more its bankers worry about significant damage to the economy and the possibility that Congress won't allow the government to borrow more. The financial market sees that as a disastrous move that could send the U.S. into recession.
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"I'm not going out there and beating my chest and saying the world is coming to an end here," said Brad McMillan, the Chief Investment Officer at Commonwealth Financial, an investment adviser. "But we face the possibility for significantly greater disruptions than the market is currently pricing in."
The Dow Jones industrial average fell as much as 147 points in the first hour of trading. It ended the day down 58.56 points, or 0.4 percent, at 15,133.14 points.
The Standard & Poor's 500 index fell 1.13 points, or 0.1 percent, to 1,693.87. The Nasdaq composite declined 2.96 points, or 0.1 percent, to 3,815.02.
Six of 10 industry sectors in the S&P 500 fell. Declines were led by the makers of consumer staples and industrial companies.
Defense companies, which rely on government contracts for a large part of their revenue, led declines for industrial companies. Raytheon fell $1.73, or 2.2 percent, to $76.08. Lockheed Martin dropped $2.42, or 1.9 percent, to $125.
In Washington, Republicans in the House of Representatives are insisting that Democrats negotiate over a new health care law as part of the budget talks. Senate Democrats, led by Majority Leader Harry Reid of Nevada, insist that Republicans pass a straightforward temporary funding bill with no strings attached
On Wednesday, the major indexes opened sharply lower, with U.S. lawmakers appearing unwilling to yield in their entrenched positions. After Obama summoned Congressional leaders to the White House later in the morning, the market started to recoup some of its losses, but the recovery faded throughout the afternoon.
"The markets are sending a loud message to Washington lawmakers to get their act together and resolve the budget crisis," said Peter Cardillo, chief market economist at Rockwell Global Capital.
Earlier, European Central Bank head Mario Draghi said that the partial U.S. government shutdown was a risk to economic recoveries in the U.S. and globally.