Stocks fall amid concern about budget fight

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by Steve Rothwell

Associated Press

Posted on September 23, 2013 at 1:37 PM

(AP) -- Investor worries about a budget fight in Washington pushed stocks lower on Monday, overshadowing the prospect of more economic stimulus from the Federal Reserve.

The Dow Jones industrial average was down in late morning 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 the gains that day have been wiped out since 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 and that could inject some volatility into the market," said Scott Wren a senior equity strategist at Wells Fargo Advisors.

On Monday, the S&P 500 index dropped 11 points, or 0.6 percent, to 1,698 as of 11:19 a.m. Eastern Daylight Time. The Dow Jones industrial average fell 76 points, or 0.5 percent, to 15,374. The Nasdaq composite fell 22.4, or 0.6 percent, to 3,752.

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.

William Dudley, the President of the Fed's New York Branch said Monday that any changes to the bank's stimulus must be based on the most recent measures of economic health, according to a Reuters report.

Apple shares rose the most in the S&P 500 after the company said that shoppers had snapped up 9 million of its newest iPhones following the rollout of the devices on Friday. Apple surged $20.57, or 4.4 percent, to $488.

Blackberry, the Canadian smartphone maker that has seen the popularity of its products wane since the introduction of the iPhone, fell.

That extended a plunge in the company's stock from Friday, when Blackberry announced that it planned to cut 4,500 jobs and slash its spending as it shifts its focus back to business customers. On Monday, its stock dropped 53 cents, or 5.9 percent, to $8.20.

Goldman Sachs, Nike and Visa began trading on the 30-member Dow on Monday, replacing Alcoa, Bank of America and Hewlett-Packard.

The Standard and Poor's 500 index is up 19 percent for the year. If the index closed the year at its current level it would log its best return since 2009, when it rose 23 percent.

In government bond trading, the yield on the 10-year Treasury note fell to 2.71 from 2.74 percent.

In commodities trading, the price of oil fell $1.47 cents, or 1.4 percent, to $103.28 a barrel. The price of gold fell $6.20, or 0.5 percent, to $1,326.30 an ounce.

The dollar rose against the euro and fell against the Japanese yen.

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