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Wall St down after two-week decline as Washington deadlocked

CBOE Volatility index VIX jumped 8.8% to 18.22, its highest since late June

Reuters New York

US stocks fell on Monday with the Dow and the S&P 500 adding to their two-week decline as the US government shutdown dragged on with no signs politicians were willing to relax positions over the debt-ceiling limit or budget impasse.

Reflecting a rise in the level of investor anxiety, the CBOE Volatility index VIX, Wall Street's so-called fear gauge, jumped 8.8% to 18.22, its highest since late June.

As the US government neared the second week of a shutdown with no end in sight, a deadlocked US Congress also confronted an October 17 deadline to increase the nation's borrowing power or risk default.

 

In comments on Sunday television political talk shows, neither Republicans nor Democrats offered any sign of impending agreement on either the shutdown or the debt ceiling, and both blamed the other side for the impasse.

"The market is obviously showing some unnecessary worries, while at the same time preparing for earnings season," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

He added that the earnings season will be a "repeat what we saw last time with most companies beating their expectations with revenue not being so good."

The S&P 500 has fallen for two weeks and is down nearly 3% from its all-time high of 1,725.52 on concerns about the effect of Washington dysfunction on the economy.

Financials and energy sectors were among the worst performers. Exxon Mobil Corp shares were down 0.5% to $85.88, and Wells Fargo & Co shares were off 1.3% to $40.75.

The Dow Jones industrial average was down 93.99 points, or 0.62%, at 14,978.59. The Standard & Poor's 500 Index was down 8.54 points, or 0.51%, at 1,681.96. The Nasdaq Composite Index was down 19.15 points, or 0.50%, at 3,788.61.

Among gainers, Apple shares rose 1.7% to $491.48 after Jefferies raised the stock to a buy rating from hold. Its price target was also moved to $600, from $425.

US-listed shares of BlackBerry rose 4% to $8.00 after sources close to the matter said it is in talks with Cisco Systems , Google Inc and SAP about selling all or part of BlackBerry.

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First Published: Oct 07 2013 | 10:40 PM IST

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