Stocks fall as government shutdown drags on

Published on NewsOK Modified: October 7, 2013 at 3:34 pm •  Published: October 7, 2013

NEW YORK (AP) — Investors sent the Standard & Poor's 500 index to its lowest close in a month Monday as few signs emerged of a deal to end the U.S. government shutdown and raise the nation's borrowing limit.

Senate Democrats moved to introduce legislation to raise the nation's debt limit without the unrelated conditions Republicans have said they are seeking. The White House signaled it would accept even a brief extension in borrowing authority to prevent an unprecedented default by the United States.

On Sunday, speaker John Boehner had ruled out a vote in the House of Representatives on a straightforward bill to increase the government's borrowing without concessions from President Barack Obama.

Lawmakers have until Oct. 17 to reach a deal on increasing the nation's debt ceiling. Failure to strike a deal could cause the United States to miss payments on its debt. The Treasury warned last week that a default could push the economy into a downturn even worse than the Great Recession.

"Everything now is predicated on Washington," said Quincy Krosby, market strategist for Prudential. "That is what the market is focused on completely, getting a deal done to avoid a default."

The Standard & Poor's 500 index dropped 14.38 points, or 0.9 percent, to 1,676.12. The Dow Jones industrial average dropped 136.34 points, or 0.9 percent, to 14,936.24. The Nasdaq composite fell 37.38 points, or 1 percent, to 3,770.38.

The losses were broad. Nine of the 10 industry groups in the S&P 500 dropped. Phone companies were the only sector to advance.

Until now, the stock market has mostly moved sideways since the shutdown began at the start of the month, indicating that investors still expect lawmakers to come up with a deal. The S&P 500 is down 0.3 percent in October.

In government bond trading, the yield on the 10-year Treasury note fell to 2.63 percent from 2.65 percent. The yield has fallen close to its lowest in two months. Investors have bought Treasurys on concern that U.S. economic growth will slow as the budget impasse drags on.

There were also other signs that investors are getting gradually more nervous about the debt ceiling deadline.

The VIX index, which rises when investors are getting more concerned about stock fluctuations, rose to its highest in more than three months.

The dollar fell against the euro and the Japanese yen. The dollar index, which measures the strength of the dollar against other currencies, fell for the seventh day in nine. The gauge is close to its lowest since February.

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