NEW YORK (AP) — Investor worries about a budget fight in Washington pushed U.S. stocks lower on Monday, overshadowing the prospect of more economic stimulus from the Federal Reserve.
The Dow Jones industrial average was down in midday trading, extending two straight days of losses.
The Dow surged 147 points to an all-time high on Sept. 18 after the Fed decided to keep its huge economic stimulus program intact. That rally has since been erased 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.
"As we move into the debt ceiling debate there seems to be a higher probability that 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 fell eight points, or 0.5 percent, to 1,701 as of 12:15 p.m. (1615 GMT). The Dow fell 50 points, or 0.3 percent, to 15,400. The Nasdaq composite fell 16 points, or 0.4 percent, to 3,758.
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.
The Fed has been buying $85 billion worth of bonds each month since December 2012. The purchases have encouraged borrowing by keeping interest rates low, and prompted investors to buy stocks by making bonds more expensive by comparison.
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