US stocks drop amid fears of govt. shutdown
Monitors above the S&P 100 Stock Index Options (OEX) pit at the Chicago Board Options Exchange (CBOE) which would normally be filled with financial news and information are blank on October 29, 2012 in Chicago.
As a government shutdown looms over the federal budget in the United States, US stocks fell sharply and global investors cut allocation to US equities and bonds.
Benchmark indexes set to decrease their quarterly gains Monday, as a stalemate over federal budget increased the chances of a government shutdown, according to Market Watch.
œIt™s difficult to say what these politicians will eventually put together, but the largest problem the market faces here is not per se the budget controversy, or the debt ceiling, or even quarterly earnings, it™s complacency, which is unsettling because it opens the possibility of a larger decline on any negative news,” said Bruce Bittles, chief investment strategist at RW Baird & Co.
All 10 main industries of Standard & Poor™s 500 index dropped. Microsoft Corp. led the declines with a 1.1 percent fall among the largest companies while shares in finance, telephone and energy fell the most.
Dow Jones Industrial Average fell 112.04 points, or 0.8% while Nasdaq Composite declined 16.71 points, or 0.6 percent.
œWe™ve been down this road before. It™ll last until there™s some disruption or event that™ll cause outrage in the public and then the politicians snap in line to settle it,” said Tim Hartzell, a chief investment officer at Sequent Asset Management, according to Bloomberg.
Some 54 global investors across the US, Europe, and Japan cut allocations to US stocks to a 4-month low of 41.7 percent, Reuter™s September global asset allocation poll showed Monday.
Also contributing to the US stock fall are growing concerns over US monetary and fiscal policies this month as investors wait to see when the US central bank will withdraw its huge monetary stimulus and by how much.
The US government is bracing on Monday for its first shutdown in 17 years as there is little hope of finding a compromise in Congress to keep the government funded.
Republicans do not consider the only plan President Barack Obama accepts. And Obama do not allow Republican lawmakers to dismantle any part of his Affordable Care Act, known as Obamacare.
The GOP-controlled House was set to œsend another provision not to shut the government down but to fund it. And it will have a few other options in there for the Senate to look at,” House Majority Whip Kevin McCarthy (R-Calif.) told Fox News on Sunday.
Copyright: Press TV