U.S. stocks fell, with the Standard & Poor’s 500 Index (CME:SPZ13) sliding a second day, as data showed weaker-than-forecast growth in service industries and concern grew that the political impasse could lead to a recession.
Eli Lilly Co. dropped 3.5% after the drugmaker said it would be “challenging” for it to meet its 2014 sales target. United Technologies Corp., a supplier of helicopters and jet engines to the military, retreated 1% after saying the shutdown would lead to as many as 5,000 temporary layoffs. Boeing Co. sank 1.9% as industrial stocks led losses among S&P groups. PulteGroup Inc. slid 2.3% as all 11 members of an S&P gauge of homebuilders fell.
The S&P 500 lost 0.8% to 1,681.17 at 2:51 p.m. in New York. The Dow Jones Industrial Average slid 108.21 points, or 0.7%, to 15,024.93. Trading in S&P 500 stocks was 12% above the 30-day average at this time of day.
“I think people are starting to raise an eyebrow finally,” Joseph Saluzzi, partner and co-head of equity trading at Themis Trading LLC in Chatham, New Jersey, said in a phone interview. “The longer this goes on, people get a little more nervous. And when people get nervous they sell first and ask questions later.”
Talks last night between congressional leaders and President Obama failed to break the fiscal stalemate, with both sides repeating the positions they’ve held for weeks.
‘One Way Out’
Obama said today there is only “one way out” of the shutdown -- for House Speaker John Boehner to allow a vote on a stopgap spending bill without conditions. The speaker urged Democrats to negotiate a settlement, blaming them for causing the stoppage.
The S&P 500 fell as much as 1.4% before trimming its decline. The paring accelerated after Boehner’s spokesman said the speaker would not let the government default on its debt.
Boehner “has always said that the U.S. will not default on its debt, but if we’re going to raise the debt limit, we need to deal with the drivers of our debt and deficits,” spokesman Michael Steel said.
The Treasury has said measures to avoid exceeding the the $16.7 trillion debt ceiling will be exhausted by Oct. 17 and warned today that a default caused by failure to raise the cap could have catastrophic consequences that might last decades.
“Not only might the economic consequences of default be profound, those consequences, including high interest rates, reduced investment, higher debt payments, and slow economic growth, could last for more than a generation,” the Treasury said in the report.