Stocks fall after US hiring report disappoints

First Posted:

(AP) The U.S. stock market fell on the second day of a government shutdown after a private poll showed that employers added fewer jobs last month than economists had forecast.

U.S. businesses added 166,000 jobs last month, payroll company ADP said Wednesday, a level consistent with only a modest improvement in hiring. Economists polled by FactSet had forecast 180,000 jobs would be added.

About 800,000 federal workers were staying home again Wednesday on the second day of the first partial shutdown of the U.S. government since the winter of 1995-96, with little sign of an imminent deal to break the stalemate.

Republicans in the House of Representatives are insisting that Democrats negotiate over the new health care law as part of the funding deadlock. Senate Democrats, led by Majority Leader Harry Reid of Nevada, insist that Republicans pass a straightforward temporary funding bill with no strings attached.

The Dow Jones industrial average fell 131 points, or 0.9 percent, to 15,057 as of 10:10 a.m. Eastern. The Standard & Poor’s 500 index dropped 14 points, or 0.8 percent, to 1,681. The Nasdaq composite declined 27 points, or 0.7 percent, to 3,790.

The longer the budget fight drags on, the more investors will start to fret about the looming showdown about raising the government’s borrowing limit, said Brad McMillan, the Chief Investment Officer at Commonwealth Financial, an investment adviser.

Treasury Secretary Jacob Lew told Congress that unless lawmakers act in time, he will run out of money to pay the nation’s bills by Oct. 17. Congress must periodically raise the limit on government borrowing to keep U.S. funds flowing, a once-routine matter that has become locked in battles over the federal budget deficit.

“I’m not going out there and beating my chest and saying the world is coming to an end here,” said McMillan. “But we face the possibility for significantly greater disruptions than the market is currently pricing in.”

The last time there was an impasse over the borrowing limit in August 2011 it led to a downgrade of the United States’ credit rating by Standard & Poor’s, setting off a plunge in the stock market.

In government bond trading, the yield on the 10-year Treasury note fell to 2.60 percent from 2.65 percent on Tuesday.

In commodities trading, the price of oil climbed 28 cents, or 0.3 percent, to $102.39 a barrel. Gold rose $21, or 1.6 percent, to $1,307.40 an ounce.

The dollar fell against the euro and the yen.

Among stocks making big moves:

Monsanto fell $2.86, or 3 percent, to $102.07, after the company reported a wider loss than analysts were expecting because of weak sales of genetically engineered seeds.

Global Payments rose $4.29, or 8.4 percent, to $54.96, after the company named a new CEO, sped up share repurchase plans and increased its profit outlook. The company provides electronic transaction processing services for retailers, financial institutions and government agencies.