New York Report: Markets slip on fear of effects from shutdown

US STOCKS slipped yesterday as the possibility of a partial government shutdown rose, although major indexes were on still track to close out September with solid gains.

With just hours to go before a midnight deadline to avert a federal government shutdown, the S&P 500 was down about 0.5 per cent, cutting initial losses almost in half.

Market participants have grown accustomed to political battles in Washington resulting in a last-minute accord and voiced scepticism any shutdown would last for an extended period.

The CBOE Volatility index, or fear index, was up 6.8 per cent at 16.51. The index has risen more than 19 per cent in the last three sessions.

Senate Democrats killed a proposal by the Republican-led House of Representatives to delay Obamacare for a year in return for temporary funding of the federal government.

The Dow Jones industrial average was down 98.09 points, or 0.64 per cent, at 15,160.15. The Standard & Poor’s 500 Index was down 7.41 points, or 0.44 per cent, at 1,684.34. The Nasdaq Composite Index was down 6.53 points, or 0.17 per cent, at 3,775.06.

Energy shares slumped 0.7 per cent, dropping alongside a one per cent fall in US crude oil prices as the possible government shutdown stoked demand concerns. Exxon Mobil fell 0.6 per cent to $86.42 while Occidental Petroleum lost 1.1 per cent to $93.39.

Defence names also declined. Lockheed Martin fell 0.9 per cent to $128.08 and Alliant Techsystems lost 0.5 per cent to $97.79.