Wall St falls as shutdown weighs

Downbeat September service sector data adds to investor worries about outlook amid US political deadlock.

United States stocks fell broadly Thursday, as investors weighed the consequences of an extended partial government shutdown after a budget deal remained elusive in Washington.

The Dow Jones Industrial Average fell 137 points, or 0.9%, to 14,996 points, its ninth decline in 11 sessions and closing below 15,000 for the first time in a month. All but four Dow components were lower.

The S&P 500 index gave up 15 points, or 0.9%, to 1,679 points.

The Nasdaq Composite index shed 41 points, or 1.1%, to 3,774 points.

Republicans and Democrats remained at an impasse over terms for reopening the federal government. Highlighting investor jitters, the Dow shed as much as 186 points to 14,947 points intraday, later rebounding following a report that House Speaker John Boehner (R., Ohio) told Republican colleagues that he wouldn't allow the US to default on its debt. Stocks briefly dipped again in the afternoon after reports of gunshots outside the US Capitol.

Investors say the intraday moves underscored the nervous mood among investors as the shutdown of the federal government entered its third day and the deadline to raise the nation's borrowing limit drew closer.

But most investors remained confident that Washington would resolve the more pressing issue of raising the nation's debt ceiling, despite the stalemate over funding the government. The Obama administration underscored the economic consequences of a long-term fight over spending and the borrowing limit.

"I'm not sitting here expecting a default," said Chris Bertelsen, chief investment officer of Global Financial Private Capital, a $2.3 billion money manager in Sarasota, Fla., adding that he has been cautiously buying stocks the past two days. "It's hard to guess what goes on as far as the political situation is concerned, but from an investment view point there are some opportunities this has created."

Still, there were signs the impact of the shutdown was spilling over into the broader economy. Dow component Boeing slid 2.3% after it warned that deliveries of some of its jets could be delayed as a result of the partial government shutdown.

Fellow blue chip United Technologies dropped 1.2% after the defense contractor said it would be forced to furlough 2,000 workers at a facility that makes Black Hawk helicopters for the Defense Department. It said that number could double if the shutdown lasts through next week.

Ian Winer, director of equity trading at Wedbush Securities, said investors across the spectrum were selling on Thursday amid concerns over the discord in Washington.

"We've seen selling from all kinds of institutions," he said. "We've seen hedge funds selling, we've seen mutual funds selling. It just doesn't seem like there's a whole lot of demand there because people are worried about the situation in Washington."

Investors say the more pressing issue than the shutdown is the need to raise the borrowing limit, which the Treasury Department says must happen this month. Economists warn of dire consequences should the nation fail to pay its debts.

Jim Anderson, investment specialist at J.P. Morgan Private Bank, which oversees about $910 billion, said a shutdown of two or three weeks would be "a nick to GDP."

"The debt ceiling is another matter," he said, calling it "an uncertainty with greater danger." He said he exited from some stock positions ahead of the shutdown, citing the political uncertainty, stocks' steep gains this year and other factors.

"As long as it doesn't extend and impact the debt ceiling issue, there's not too much to worry about," said John Buckingham, chief investment officer at AFAM Capital, which oversees about $750 million. He said he has more cash than usual in his portfolio now and is waiting for further declines before buying new stocks. "I may be wrong, but I don't believe anyone has priced in a default."

Stocks began the day lower after the Institute for Supply Management's purchasing managers index for September missed projections. The reading on the nation's service sector fell to 54.4 from 58.6 in August, missing expectations of 57.

The reading followed a report showing initial claims for jobless benefits in the latest week increased to 308,000, shy of expectations of 314,000. The previous week's claims were revised up to 307,000 from 305,000.

The Labor Department said it doesn't plan to issue its highly anticipated September jobs report Friday. An alternate release date hasn't been scheduled.

The yield on the 10-year Treasury note inched lower to 2.606% from 2.624% late Wednesday.

Gold futures fell 0.2% to $1,318.30 an ounce, pulling back after the previous session's sharp gains. November crude-oil futures eased 1% to $103.02 a barrel. The dollar slipped against both the yen and the euro.

European markets finished lower following US markets despite upbeat data out of the euro zone. Markit's composite purchasing managers index for the 17-nation currency bloc rose to 52.2 in September, the highest reading in more than two years, while retail sales for August rose slightly more than expected.

Asian markets were mostly higher after China's official services purchasing managers index for September rose to a six-month high. Mainland Chinese markets remained closed for a holiday. Japanese stocks bucked the region's trend, as the Nikkei Stock Average slipped 0.1 to a four-week low.

Among other stock movers, Tesla Motors fell 4.2%, falling for a second day after a video of a Model S catching fire was posted online.

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