On Wall Street, stock prices fell on Monday as there are no signs of progress in the discussions between Democrats and Republicans in Washington regarding the budget and the allowed state borrowing.
The Dow Jones dropped 136 points, or 0.90 percent, to 14,936 points, while the S&P 500 slid 0.85 percent to 1,676 points, and the Nasdaq index fell 0.98 percent to 3,770 points.
U.S. federal services have been non-operational for nearly a week, and there is no indication of when about a million employees might return to work as there is no progress in negotiations between Democrats and Republicans regarding the budget.
Investors are becoming increasingly nervous as the deadline approaches for Congress to approve the proposal to raise the allowed level of state borrowing from the current $16.7 trillion.
If an agreement is not reached by October 17, the U.S. government will not be able to meet all its financial obligations, which could severely shake financial markets.
– The market will be vulnerable as long as the situation remains unclear, and investors are becoming more uncertain every day – says Leo Grohowski, director at BNY Mellon Wealth Management.
The uncertainty among investors is indicated by yesterday’s strong 16 percent jump in the VIX ‘fear’ index of the Chicago Board Options Exchange, which reached its highest level since June. Over the past three weeks, this index has risen nearly 50 percent, showing that investors are increasingly hedging their portfolios against potential further declines in stock prices.
