U.S. stocks fell, after the Standard & Poor’s 500 Index (CME:SPZ13) dropped to the lowest level in a month, as congressional leaders said the other party must move to resolve the government shutdown and avoid a debt default.
Xerox Corp. slid 1.5% after announcing the U.S. has been probing the accounting practices of its outsourcing division. J.C. Penney & Co. climbed 4.5% as the retailer said its sales decline slowed in September. McKesson Corp. climbed 4.2% on a report that it’s in advanced talks with majority shareholder Franz Haniel & Cie GmbH to buy German drug wholesaler Celesio AG.
The S&P 500 fell 0.6% to 1,665.51 at 11:35 a.m. in New York. The Dow Jones Industrial Average lost 80.15 points, or 0.5%, to 14,856.09. The Nasdaq Composite Index tumbled 1.4% to 3,718.56. Trading in S&P 500 stocks was 7.5% above the 30-day average during this time of day.
“You’re going to see the debt limit ceiling coming to play at the end of the week and the market could get volatile,” Bernie Williams, chief investment officer of investment solutions who oversees $16.7 billion at USAA Investments in San Antonio, said in a phone interview. “But the assumption on everybody’s part is that this gets revolved in a week or two, maybe in a messy way, and doesn’t damage the economy.”
The S&P 500 slumped 0.9% yesterday to a four-week low as lawmakers remained deadlocked over extending the nation’s debt limit to avoid a default.
U.S. congressional leaders said the other party must act to resolve the impasse. Senate Majority Leader Harry Reid said the Republican-controlled House should vote to end the government shutdown and drop demands to change the 2010 Affordable Care Act. House Speaker John Boehner said Reid and President Barack Obama should negotiate.
Lawmakers began taking the first tentative steps toward a path to raising the U.S. debt limit even as the rhetoric grew more divisive. Senate Democrats are planning a test vote before the end of this week on a measure that would grant Obama authority to raise the $16.7 trillion debt ceiling, probably for a year unless two-thirds of both chambers of Congress disapprove.
The Treasury has said that it will exhaust measures to avoid exceeding the borrowing limit on Oct. 17. If that happens, the government will run out of cash to pay all of its bills at some point between Oct. 22 and Oct. 31, according to the Congressional Budget Office.