Stocks fell sharply Thursday afternoon as lawmakers in Washington, D.C., struggled to come to terms with the spending measures investors have been speculating for weeks, with a prominent Democratic senator saying he would only like many of President Joe Biden’s policy. will support a large social spending package including Preferences if the price tag is cut by more than half.
Although shares started the day with modest gains, the Dow Jones Industrial Average fell 466 points, or 1.4%, to 33,924 at 1 p.m. EDT, setting the index for its first monthly decline since June.
Meanwhile, the S&P 500 fell 0.9%, while the tech-heavy Nasdaq fell 0.3%, placing each index nearly 5% below its all-time highs set earlier this month.
Stocks began falling shortly before noon Thursday, as House Speaker Nancy Pelosi (D-Calif.) reiterated plans to move forward with a vote on a $1.2 trillion bipartisan infrastructure proposal, despite opposition from House Progressives, who insisted Said they would only support. The bill is passed by the Senate once the Senate moves on to a $3.5 trillion social spending package that seeks to fight climate change and expand Social Security benefits.
The damage got worse after Sen. Joe Manchin (DW.Va.), whose vote is crucial given the Democrats’ one-vote lead in the chamber, announced he had raised the huge bill’s total price tag to $1.5 trillion. reduced support.
Adding to the uncertainty, Munchkin too air conditioned His support for the Federal Reserve to end its unprecedented pandemic-era stimulus efforts, which have helped propel markets to new highs and historically lows to help inject cash into the economy and boost spending interest rates and monthly asset purchases of $120 billion.
Consumer staples and industrial stocks, two sectors that have climbed on anticipation of increased fiscal spending, posted losses in the S&P on Thursday afternoon, falling 1.5% and 1.4%, respectively.
Lawmakers face critical deadlines in the coming weeks as they race to avert an imminent government shutdown and a loan default, while Democratic leaders try to advance Biden’s agenda. In addition to the upcoming infrastructure vote on Thursday, the Senate is expected to vote as soon as next week on a measure to suspend debt limits for another year. On Tuesday, Treasury Secretary Janet Yellen, who warning The potential default could trigger an “economic catastrophe,” said the department, which said the department would exhaust its ability to pay the nation’s bills by October 18, but Republicans have so far insisted they do not pass the House-passed bill. Democrats should instead wrap the measure in a budget plan to be passed on a one-party basis using a special process called conciliation. However, Schumer on Thursday dismissed that option, saying the “pulled, unpredictable process” is taking too long and “unnecessarily jeopardizing the stability of our country.”
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The House and Senate are expected to pass a stopgap funding measure on Thursday afternoon to avoid a government shutdown, giving the bill enough time to make its way to Biden’s desk before the current funds close at midnight. be finished.
In an afternoon note, market analyst Adam Crisafuli, founder of Vital Knowledge Media, said he is “most concerned” with a “serious battle of gridlock” in Washington prompting lawmakers to cut plans to spend more than investors expect. can force. Although Crisafuli believes that it is likely that a debt ceiling solution will eventually be found, he says that “the fact that it is being used as a negotiating tool for the first time in years clearly But it’s negative.”
Republicans block Democratic effort to raise debt limits as officials warn of economic devastation (Businesshala)
Yellen warned that the treasury would run out on October 18, causing ‘serious damage’ to trade (Businesshala)