Debt ceiling fears hit stocks
NEW YORK (CNNMoney) — It’s day two of the government shutdown. And now investors seem more nervous.
After rising on the first day of the shutdown, investors are becoming more alarmed about the ramifications of the political stalemate in Washington.
The Dow, the S&P 500, and the Nasdaq dropped roughly 0.5% Wednesday in early trading.
The biggest worry now: the potential for a government default on October 17. If Congress fails to raise the debt ceiling, the U.S. government will be unable to pay all of its bills later this month.
Treasury Secretary Jack Lew said Tuesday that the government has started to use the last of its “extraordinary measures” to ensure it stays below debt ceiling.
With Congress unable to agree on a deal to fund the government past Monday, more than 800,000 federal workers are being furloughed without pay this week. In addition, government agencies are curtailing their services, and federal museums, parks and monuments are closed to the public.
Payroll processor ADP’s monthly report on private-sector jobs showed that the U.S. added 166,000 jobs in September, slightly below expectations. The report has more significance this month than usual. It appears increasingly unlikely that the U.S. government’s monthly employment report will be released this Friday because of the government shutdown.
What’s moving: Shares of agriculture technology firm Monsanto dropped after the company missed earnings expectations.
Shares of Tesla fell following an analyst downgrade. But the stock remains one of the best performers of the year as individual investors have embraced the maker of the electric Model S.
IPO frenzy: The IPO boom continued this week despite the government shutdown. Three companies are set to debut Wednesday.
Empire State Reality Trust, which owns the Empire State Building and other real estate holdings in the New York City area, will start trading as a public company after raising $930 million through an initial public offering.
Real estate broker Re/Max and Burlington Holdings, the owner of the Burlington Coat Factory, will also begin trading.
European markets were weaker in midday trading, weighed down by worries about the shutdown in Washington. The European Central Bank left interest rates unchanged after its latest policy meeting. Asian markets ended mixed.