10-14-2013 02:03 PM

Wall Street down on growing default concerns

A trader works on the floor of the New York Stock Exchange (NYSE) just after the opening bell, October 10, 2013.
Credit: Reuters/Mike Segar




By Angela Moon
NEW YORK | Mon Oct 14, 2013 10:03am EDT

(Reuters) - U.S. stocks fell broadly on Monday, focused on events in Washington after weekend talks between Republicans and Democrats showed some progress but failed to remove the risk of a possible U.S. default in three days, pressuring stocks.
All ten sectors on the S&P were down. The S&P financial sector index .SPSY and S&P utilities index .SPLRCU were among worst decliners, down 0.5 percent and 0.9 percent, respectively.
The lack of a definitive agreement was putting pressure on equities as there were no guarantees an historic debt default would be avoided. In addition, the government shutdown, entering its third week, was seen as a drag on the economy.
Senate Majority Leader Harry Reid and Republican leader Mitch McConnell held talks that Reid later called "substantive." Reid did not provide details, but his remarks gave some hope that Congress soon might pass legislation to fund the government and raise its borrowing authority.
Both the Senate and House are scheduled to be in session on Monday, even though it is the Columbus Day federal holiday. No economic data and major earnings were due for Monday.
"Time is fast running out, and as we noted last week, it may yet take a market storm for prudence to prevail," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York.
Also pressuring the market was trade data from China, which showed an unexpected decrease in exports in September for the weakest performance in three months. Another set of data showed Chinese consumer prices rose faster than expected in September.
The Dow Jones industrial average .DJI was down 73.66 points, or 0.48 percent, at 15,163.45. The Standard & Poor's 500 Index .SPX was down 8.33 points, or 0.49 percent, at 1,694.87. The Nasdaq Composite Index .IXIC was down 16.13 points, or 0.43 percent, at 3,775.74.
In company news, Netflix Inc (NFLX.O) shares rose 2.9 percent at $309.60 after the Wall Street Journal reported that it is in talks with several U.S. cable television companies, including Comcast Corp and Suddenlink Communications to make its streaming video service available through their set-top boxes.
Expedia Inc (EXPE.O) shares were off nearly 8 percent at $47.90 after a rating cut by Deutsche Bank AG.
Major companies will resume reporting third-quarter earnings. On Tuesday earnings are expected from Citigroup Inc (C.N), Coca-Cola Co (KO.N), Johnson & Johnson (JNJ.N), and Intel Corp (INTC.O).
U.S. stocks had risen strongly ahead of the weekend on hopes a deal to raise the $16.7 trillion federal borrowing limit was near. Failure to raise the debt ceiling would leave the world's biggest economy unable to pay its bills in the coming weeks.
International Monetary Fund managing director Christine Lagarde, speaking in Washington, warned of "massive disruption" to the global economy if the U.S. debt ceiling, which will be reached on Thursday, was not lifted.
(Reporting by Angela Moon)



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