The mood in financial markets was cautious on Monday as the partial shutdown of the American government entered a seventh day and lawmakers appeared to be making little headway in raising the country’s debt ceiling.
The Dow Jones industrial average fell 136 points, or 0.9 percent, to close at 14,936 on Monday. The Standard & Poor's 500 index fell 14 points, or 0.9 percent, to 1,676, the lowest in a month. The Nasdaq composite fell 37 points, or 1 percent, to 3,770.
Global markets were mainly lower and the price of oil dropped as traders became nervous about the standoff in Washington, particularly over the debt ceiling. The United States has to raise its debt ceiling by Oct. 17. If it doesn’t, the world’s largest economy faces the possibility of defaulting on its debts, a move that would send shock waves around the global economy and financial markets.
Though most analysts think a deal between Republicans in Congress and the White House to avoid default will be cobbled together in time, investors are fidgety — uncertainty discourages them from buying into risky assets, like stocks.
On Sunday, House Speaker John Boehner ruled out a vote on a straightforward bill to raise the government’s borrowing authority without concessions from President Obama before the deadline.
“As the partial shutdown of the U.S. government enters week two, there is little sign that the fiscal stalemate in Washington is being broken,” said Neil MacKinnon, global macro strategist at VTB Capital. “Investors are on the sidelines until there is greater clarity or a last-minute resolution between the White House and the Republicans ahead of the debt ceiling deadline.”
In Europe, the FTSE 100 index of leading British shares ended the session down 0.3 percent, and Germany’s DAX fell 0.4 percent. The CAC 40 in France closed unchanged.
The focus of attention in financial markets will likely remain on developments in Washington. Any comments from leading Republicans, like Mr. Boehner, and President Obama could potentially be big market-moving events.
The dollar has also been on the defensive amid the budget fallout. It was struggling again Monday, with the euro up 0.1 percent at $1.3574 and the dollar 0.6 percent lower at 96.92 yen. Oil prices have drifted lower, and the benchmark New York crude rate was down another 49 cents at $103.35 a barrel.
Earlier in Asia, Japan’s Nikkei index tumbled by 1.2 percent and Hong Kong’s Hang Seng Index dipped 0.7 percent. Trading was nearly flat on South Korea’s Kospi, and China’s markets were closed for a public holiday.