U.S. stocks retreat amid jobs data as shutdown enters 2nd day

U.S. stocks fell, after the Standard & Poor’s 500 Index rose the most in almost two weeks, as a private jobs report showed companies added fewer jobs than forecast and the government shutdown entered a second day.

BlackBerry Ltd. slid 4% after the smartphone maker said the cost to cut staff as it tries to sell itself will be four times its original forecast. Alcoa Inc. slumped 2% after Deutsche Bank AG lowered its rating on the aluminum producer. Global Payments Inc. rallied 11% after boosting its earnings forecast.

The S&P 500 lost 0.6% to 1,684.35 at 11:05 a.m. in New York. The Dow Jones Industrial Average fell 111.06 points, or 0.7%, to 15,080.64. Trading in S&P 500 stocks was 4.9% above the 30-day average at this time of day.

“People thought there would be a deal struck in fairly short order and that is obviously not occurring,” Matthew Kaufler, a portfolio manager at Federated Investors Inc. in Rochester, New York, said by phone. His firm oversees $363.8 billion. “You not only have the current impasse, but you have the debt ceiling issue that is looming as well. In the short term, we are in for a choppy market.”

The benchmark gauge for U.S. equities climbed 0.8% yesterday, as investors speculated any economic effects from the first partial shutdown of the U.S. government since 1996 would be limited. The index rallied 4.7% in the third quarter and is 19% higher in 2013.

No Talks

Equities plunged today after the first day of the federal work stoppage ended with no talks scheduled between the White House and Congress, making it more likely the standoff would merge with the fight over raising the U.S. debt limit.

A partial shutdown lasting one week would probably shave 0.1 percentage point from economic growth, according to the median estimate of economists, with the costs accelerating if the closing persists.

“The impact on the broader economy does start to kick in as the shutdown extends beyond a week, two weeks,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut, whose estimate matched the survey median. “If it’s a couple of days or even a week it’s something that we’ll have forgotten about a month or two from now.”

The U.S. has begun final steps to avoid breaching the debt limit, Treasury Secretary Jacob J. Lew said, urging Congress to raise the borrowing authority “immediately” in a letter addressed to House Speaker John Boehner. Lew repeated that the measures will be exhausted no later than Oct. 17.

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