By Dow Jones Business News, October 15, 2013, 06:14:00 PM EDT
--Stocks decline on Washington worries
--DJIA down 133.25; S&P 500 falls 12.08
--Citigroup falls 1.5% on earnings disappointment
(Adds analyst comments, details and prices)
By Alexandra Scaggs
U.S. stocks fell Tuesday as investors grew jittery about a possible derailment of negotiations to resolve the budget
stalemate in Washington.
Prior to Tuesday's session, stocks had been trending higher in recent days on optimism that progress was being made
toward a deal that heads off the U.S. missing payments on its debt.
But stocks sank during afternoon trading on news that the Senate had put negotiations on hold amid continued political
wrangling in the House of Representatives.
"Investors are nervous, and they should be," said Joe Saluzzi, co-head of trading at Themis Trading. "The market is
trading on every time these people [in Congress] flinch."
The Dow Jones Industrial Average fell 133.25 points, or 0.9%, to 15168.01. The S&P 500 index dropped 12.08 points, or
0.7%, to 1698.06, and the Nasdaq Composite Index lost 21.26 points, or 0.6%, to 3794.01.
Meanwhile, the dollar fell against the yen for a second session. It rose against the euro and the Swiss franc after
the news, but gave up some of those gains in late trading.
Investors have become frustrated as the first partial government shutdown in 17 years drags on. Thursday is the
deadline set by the U.S. Treasury Department to raise the federal borrowing limit, or risk defaulting on the nation's
debt. After the close of trading, Fitch Ratings warned that it could downgrade the U.S. from a AAA rating.
Still, traders said that the declines didn't indicate that investors were bailing out. Stocks gyrated in choppy
trading for most of the session. And even with Tuesday's losses, the S&P 500 is just 1.6% below its record high.
The declines were "a highly unconvinced kind of selling," said Jeff Yu, head of U.S. single-stock derivatives trading
with UBS AG. Buyers are "taking some money off the table after a very nice rally," as they see "a higher chance of
Washington's rancor spreading into the market."
While Washington took top billing, earnings-reporting season kicked into high gear Tuesday. Citigroup shares fell by
74 cents, or 1.5%, to $48.86 after the bank reported earnings below analyst expectations, hurt by weak fixed-income
Earnings are on track for 0.7% of third-quarter earnings growth from the previous year, according to FactSet.
European stocks saw strong gains. Germany's DAX index rose 0.9% to close at a record high, boosted by upbeat data. The
U.K.'sFTSE 100 was 0.6% higher and France's CAC 40 rose 0.8%. The benchmark Stoxx Europe 600 index gained 0.8%.
Elsewhere in the currency markets, China's yuan briefly hit a record high against the dollar Tuesday, with the dollar
at 6.1011 yuan. The People's Bank of China fixed the dollar-yuan pair at 6.1412 Tuesday, having set it at a record low
of 6.1406 Monday following dollar weakness overseas. The yuan is allowed to trade 1% above or below the fixing.
--Tomi Kilgore contributed to this article.
Write to Alexandra Scaggs at email@example.com
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