Stocks fall as government shutdown continues
Stocks dropped on Wall Street Thursday on the third day of a government shutdown. An approaching deadline on raising the debt limit also pushed stocks down.
Investors sold stocks across the board Thursday as a U.S. government shutdown dragged into a third day and the nation inched toward a deadline on raising its borrowing limit.Skip to next paragraph
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The Dow Jones industrial average fell close to 200 points by late morning — before recovering somewhat later in the day — as Republicans and Democrats appeared no closer to ending the budget impasse. In speech President Barack Obama said there was only one way out of the shutdown: "Congress has to pass a budget that funds our government with no partisan strings attached."
Investors also got some disappointing economic news on Thursday.
RECOMMENDED: Government shutdown quiz
The Institute of Supply Management said that sales fell sharply, new orders dipped and hiring weakened at U.S. service companies. The report covers industries including retail, construction, health care and financial services.
On Wall Street, the Dow ended down 136.66 points, or 0.9 percent, to 14,996.48, its biggest decline since Sept. 20. It was down as much as 186 earlier.
The Standard & Poor's 500 index dropped 15.21 points, or 0.9 percent, to 1,678.66. The Nasdaq composite fell 40.68 points, or 1.1 percent, to 3,774.34.
The stock market losses on Thursday marked an acceleration of gradual declines over the last two weeks. Stocks have fallen eight of the last 10 days as investors anticipated that negotiations over the federal budget would fail. If the shutdown persists, the weak economic recovery could falter.
Republicans in the House of Representatives, pushed by a core of tea party conservatives, are insisting that Obama accept changes to the health care law he pushed through three years ago as part of a budget bill. Obama refuses to consider any deal linking the health care law to routine legislation needed to extend government funding.
The U.S. Treasury Department said Thursday that the economy could plunge into a downturn worse than the Great Recession if Congress failed to raise the debt ceiling and the country defaulted on its debt obligations.
The U.S. missing a debt payment could cause credit markets to freeze, the value of the dollar to plummet and U.S. interest rates to skyrocket, according to the Treasury report.