NEW YORK (AP) — Stocks drifted lower Monday as investors worried about the strength of the economy and the potential for a budget fight in Washington.
The Dow Jones industrial average was down in early afternoon trading, extending two straight days of losses.
The Dow set an all-time high last Wednesday after the Fed decided to keep its huge economic stimulus program intact. But that rally has been wiped out by anxiety over a budget and debt fight in Washington.
The U.S. House of Representatives voted to defund President Barack Obama's health care law on Friday, a gesture that reminded Wall Street that the Republican-led House and the Democratic-controlled Senate are poised for a showdown over spending.
The debt ceiling must be raised by Oct. 1 to avoid a government shutdown, and a potential default on payments, including debt, later in the month.
"There seems to be a higher probability there will be more of a battle over that," said Scott Wren a senior equity strategist at Wells Fargo Advisors. "That could inject some volatility into the market."
On Monday, the S&P 500 index dropped eight points, or 0.5 percent, to 1,701 as of 1:28 p.m. Eastern Daylight Time. The Dow fell 40 points, or 0.3 percent, to 15,410. The Nasdaq composite fell 11 points, or 0.3 percent, to 3,763.
Financial stocks fell the most among the 10 industrial groups in the S&P 500 index. Investors sold on concerns that earnings would be hurt by lower trading volumes of bonds and foreign currencies at investment banks.
Citigroup fell $1.54, or 3 percent, to $49.64 after the Financial Times reported that the bank had suffered a "significant decline" in trading revenues that would crimp its earnings. Goldman Sachs, which began trading on the Dow Monday, also fell. The stock slipped $4.16, or 2.5 percent, to $165.60.
Fed stimulus has helped push stocks to record levels this year and investors last week cheered its surprise decision to keep its stimulus in place. The central bank said the economy wasn't strong enough for it to pull back on its bond-buying program.
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