Stocks down at midday

Extends 2 days of losses as investors fear budget fights

9/23/2013

NEW YORK — Investor worries about a budget fight in Washington pushed U.S. stocks lower today, overshadowing the prospect of more economic stimulus from the Federal Reserve.

The Dow Jones industrial average was down in midday trading, extending two straight days of losses.

The Dow surged 147 points to an all-time high on Sept. 18 after the Fed decided to keep its huge economic stimulus program intact. That rally has since been erased by anxiety over a budget and debt fight in Washington.

The U.S. House of Representatives voted to defund President Barack Obama’s health care law on Friday, a gesture that reminded Wall Street that the Republican-led House and the Democratic-controlled Senate are poised for a showdown over spending.

The debt ceiling must be raised by Oct. 1 to avoid a government shutdown, and a potential default on payments, including debt, later in the month.

“As we move into the debt ceiling debate there seems to be a higher probability that will be more of a battle over that,” said Scott Wren a senior equity strategist at Wells Fargo Advisors. “That could inject some volatility into the market.”

Today, the S&P 500 index fell eight points, or 0.5 percent, to 1,701 as of 12:15 p.m. Eastern Time. The Dow fell 50 points, or 0.3 percent, to 15,400. The Nasdaq composite fell 16 points, or 0.4 percent, to 3,758.

Fed stimulus has helped push stocks to record levels this year and investors last week cheered its surprise decision to keep its stimulus in place. The central bank said the economy wasn’t strong enough for it to pull back on its bond-buying program.

The Fed has been buying $85 billion worth of bonds each month since December 2012. The purchases have encouraged borrowing by keeping interest rates low, and prompted investors to buy stocks by making bonds more expensive by comparison.

William Dudley, the president of the Fed’s New York branch, said today that any changes to the bank’s stimulus must be based on the most recent measures of economic health, according to a Reuters report.

Apple shares rose the most in the S&P 500 after the company said that shoppers had snapped up 9 million of its newest iPhones following the rollout of the devices on Friday. Apple surged $17, or 4 percent, to $484.

Blackberry, the Canadian smartphone maker that has seen the popularity of its products wane since the introduction of the iPhone, fell.

That extended a plunge in the company’s stock from Friday, when Blackberry announced that it planned to cut 4,500 jobs and slash its spending as it shifts its focus back to business customers. Today, its stock dropped 36 cents, or 4 percent, to $8.37.

Goldman Sachs, Nike and Visa began trading on the 30-member Dow today, replacing Alcoa, Bank of America and Hewlett-Packard.

The Standard and Poor’s 500 index is up 19 percent for the year. If the index closed the year at its current level it would log its best return since 2009, when it rose 23 percent.

In government bond trading, the yield on the 10-year Treasury note fell to 2.71 from 2.74 percent late Friday.

In commodities trading, the price of oil fell $1.04, or 1 percent, to $103.71 a barrel in New York. The price of gold fell $4.80, or 0.4 percent, to $1,327.70 an ounce.

The dollar rose against the euro and fell against the Japanese yen.