Stocks fall as investors fret over budget fight
Washington's money fight jolted investors on Friday, reminding them that the next few weeks are likely to bring a lot of uncertainty. Wall Street hates uncertainty.
Stocks fell. Major indexes were mixed in morning trading, but turned lower around midday after the U.S. House of Representatives voted to defund President Barack Obama's health care law.
The vote itself wasn't a surprise, but it reminded investors that the Republican-led House and the Democratic-controlled Senate are poised for a showdown over federal spending.
The debt ceiling must be raised by Oct. 1 to avoid a government shutdown, and a potential default on payments, including debt, later in the month.
"What we've done is basically committed ourselves to two weeks of worry," said Sam Stovall, chief equity strategist at S&P Capital IQ.
Until now, September defied the worriers. The stock market has bounced backed from an August swoon, despite a calendar loaded with potential rally killers.
Fears of a conflict with Syria have faded and Wall Street cheered when Larry Summers withdrew his name as a candidate to replace Federal Reserve chairman Ben Bernanke.
Summers, a former Treasury secretary, was viewed as being more likely to rein in the Fed's massive stimulus program, which has kept interest rates low and boosted corporate profits.
The Standard & Poor's 500 index is up 5 percent this month. If that holds, it would be the index's best monthly performance since January. Even with Friday's declines, stocks are near all-time highs set earlier this week.
As Middle East strife recedes from investors' minds, though, fears of budget gridlock grow.
"Geopolitics ... is much lower on the list. It's not off the list" of investor worries, said David Darst, chief investment strategist for Morgan Stanley Wealth Management. "No. 1 becomes the debt ceiling and the federal spending debate."
In afternoon trading, the Dow Jones industrial average was down 122 points, or 0.8 percent, to 15,514. The S&P 500 index fell 10 points, or 0.6 percent, to 1,712. The Nasdaq composite fell seven points, or 0.2 percent, to 3,781.
Health care was the only industry to rise among the 10 groups in the S&P 500. Industrial companies and tech stocks saw the biggest declines.
Darden, the struggling parent of Olive Garden and Red Lobster, fell $3.13, or 6 percent, to $46.17 after posting a much lower quarterly profit and saying its president and chief operating officer will retire. Sales fell at its two flagship restaurant chains despite efforts to renew menus and advertising.
Goodyear Tire & Rubber rose 23 cents, or 1 percent, to $22.46 as it reinstated a dividend after a hiatus of more than a decade. It also said it would buy back up to $100 million of its shares.
Two new stocks doubled after their initial public offerings.
Tech security company FireEye jumped 90 percent to $38.20 in its debut, and artificial intelligence company Rocket Fuel rose 91 percent to $55.43. Both had more than doubled in morning trading.
Country club manager ClubCorp rose 71 cents, or 5 percent, to $14.71 on its first day of trading.
Most overseas markets moved slightly lower, with small declines in the German DAX ahead of Sunday's election.
The price of oil fell 51 cents to $105.35 a barrel.
The dollar was flat at 1.35 euros and weakened slightly to 99.34 Japanese yen.
The yield on the 10-year Treasury note fell to 2.72 percent, from 2.76 percent on Thursday.