Stocks drop as budget uncertainty returns

Stocks dropped Friday as the U.S. House of Representatives voted to defund President Obama's health care law.

The vote itself wasn't a surprise, but it reminded investors that the Republican-led House and the Democratic-controlled Senate are poised for a big showdown over federal 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.

"What we've done is basically committed ourselves to two weeks of worry," said Sam Stovall, chief equity strategist at S&P Capital IQ.

The Dow Jones industrial average index fell 1.2% to 15,451 and the S&P 500 dropped 0.7% to 1,710. The Nasdaq composite fell 0.4% to 3,775.

On Thursday, the Dow fell 0.3% to close at 15,636.55. The S&P 500 fell 0.2% to 1,722.34. The Nasdaq rose 0.2% to 3,789.38.

The Federal Reserve's surprise decision Wednesday to maintain its $85 billion in monthly asset purchases lit a fire under many benchmarks indexes, but now that the Fed has had its say investors have begun turning their focus to Washington and the political fighting between the White House and Congress over the approaching debt ceiling.

Markets in Hong Kong, mainland China, Taiwan, South Korea and Malaysia were closed for public holidays and the Nikkei 225 index in Tokyo fell 0.2% Friday, but the big news out of the broader Asia region was that he Reserve Bank of India surprised markets there by raising its benchmark interest rate by 25 basis points to 7.5%. India stocks saw sharp falls after the announcement.

European shares traded lower.

Benchmark oil for October delivery was down 58 cents to $105.28 per barrel in electronic trading on the New York Mercantile Exchange. The contract fell $1.68 to close at $106.39 a barrel on the Nymex on Thursday.

Wall Street is likely to be watching the release of any early sales numbers from Apple as two new iPhones go on sale Friday around the world. Apple's shares (AAPL) were down 0.4% to $470.33.


To find out more about Facebook commenting please read the
Conversation Guidelines and FAQs

Leave a Comment