Shutdown chill reaches far, wide
NEW YORK — Investors sold stocks across the board on Thursday as a federal government shutdown dragged into a third day and the nation inched toward a deadline on raising its borrowing limit.
The Dow Jones industrial average fell almost 200 points by late morning as Republicans and Democrats appeared no closer to ending the budget impasse. In a speech, President Obama said there was only one way out of the shutdown: “Congress has to pass a budget that funds our government with no partisan strings attached.”
Investors also got some disappointing economic news.
The Institute of Supply Management said sales fell sharply, new orders dipped and hiring weakened at service companies. The report covers industries including retail, construction, health care and financial services.
The stock market losses on Thursday marked an acceleration of gradual declines during the past two weeks. Stocks have fallen eight of the past 10 days as investors anticipated that negotiations over the federal budget would fail. If the shutdown persists, the weak economic recovery could falter.
House Republicans insist that Obama accept changes to the health care law he pushed through three years ago as part of a budget bill. Obama refuses to consider any deal linking the health care law to routine legislation needed to extend government funding.
The Treasury Department said that the economy could plunge into a downturn worse than the Great Recession if Congress failed to raise the debt ceiling and the country defaulted on its debt obligations.
The United States missing a debt payment could cause credit markets to freeze, the value of the dollar to plummet and interest rates to skyrocket, according to the Treasury report.
The Dow fell 136.66 points, or 0.9 percent, to 14,996.48, its biggest decline since Sept. 20. The Standard & Poor's 500 index dropped 15.21 points, or 0.9 percent, to 1,678.66. The Nasdaq composite fell 40.68 points, or 1.1 percent, to 3,774.34.