Debt ceiling fears hit stocks, investors grow nervous
NEW YORK (CNNMoney) — It’s day 2 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 nearly 1% Wednesday morning.
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.
Despite a drop in the overall stock market, several companies hit new 52-week highs, including Priceline, Amazon, Netflix and Yahoo.
IPO frenzy: The IPO boom continued this week despite the government shutdown. Three companies debuted and two of them quickly shot higher.
Real estate broker Re/Max jumped more than 17%, and Burlington Holdings, the owner of the Burlington Coat Factory, spiked more than 35%.
But the parent company of the iconic Empire State Building disappointed. Shares of the building’s owner, the Empire State Reality Trust, were up just 2% in their debut. And that’s after the company priced its offering at the low end of its range Tuesday night.
World markets: 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.