US STOCKS-Wall Street flat, govt shutdown still primary focus

Fri Oct 4, 2013 10:04am EDT

* Shutdown enters fourth day, investors watch debt ceiling

* Dow, S&P 500 on track for second straight week of losses

* Adobe Systems down; hackers stole source code, client data

* Indexes: Dow down 0.1 pct, S&P flat, Nasdaq up 0.1 pct

By Ryan Vlastelica

NEW YORK, Oct 4 (Reuters) - U.S. stocks were little changed on Friday, with major indexes on track for a week of steep losses amid concerns about a partial shutdown of the U.S. government which entered a fourth day.

The S&P 500 has fallen for nine of the past 11 sessions, with the losses driven by a budget stalemate in Congress that has closed the government since midnight Monday. At the center of the impasse was the Affordable Care Act, dubbed ObamaCare, a heathcare reform plan signed into law by President Barack Obama in 2010.

The shutdown appeared likely to drag on for another week or more, with little sign of progress towards a solution. Investors are also watching the situation for how the upcoming debate over the debt ceiling might play out.

"People are reasonably sure Congress will reach an agreement to both reopen the government and raise the debt ceiling before the debt-ceiling deadline. Markets are pretty calm in the face of that belief, correctly reflecting the lack of any real harm so far," said Kate Warne, investment strategist at Edward Jones in St. Louis.

While a short-term closure was expected to have a modest economic impact, the effect is expected to become more pronounced the longer it lasts.

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said the shutdown would hurt growth in the last quarter of this year, while the Bank of Japan said an extended budget standoff would have a severe global impact.

The debt ceiling issue is considered more severe as it could result in a default on U.S. debt if no resolution is reached to increase it. On Thursday, the New York Times reported that House Speaker John Boehner told colleagues he would not let the United States default on its debt.

"If there's no agreement by the end of next week, the concern will really become greater and the impact will be more pronounced," said Warne, who helps oversee $670 billion in assets.

The Dow Jones industrial average was down 16.70 points, or 0.11 percent, at 14,979.78. The Standard & Poor's 500 Index was down 0.58 points, or 0.03 percent, at 1,678.08. The Nasdaq Composite Index was up 2.91 points, or 0.08 percent, at 3,777.26.

While shutdown concerns have pressured equities over the past two weeks, the S&P 500 index has frequently found support at its 50-day moving average of 1,679.61, though it closed slightly below that level on Thursday.

For the week, the Dow is down 1.8 percent and the S&P has slipped 0.8 percent for a second week of losses for both indexes, while the Nasdaq has shed 0.1 percent.

The CBOE Volatility Index, a measure of investor anxiety, is up 36 percent over the past two weeks, the biggest two-week jump for the index since September 2011.

Government economic data has been delayed because of the shutdown, and the September payroll report was not released as scheduled. About 180,000 jobs were expected to have been added in September, up from 169,000 added in the previous month.

Adobe Systems Inc fell 0.6 percent to $50.56, a day after the company said hackers had stolen source code to some of its most popular software as well as the confidential information of millions of its customers.

Union Pacific Corp gave a third-quarter earnings outlook late Thursday that was below expectations, as flooding in Colorado weighed on coal shipments. Shares fell 1.1 percent to $153.75.

Twitter Inc gave potential investors their first glance at its financials on Thursday when it publicly filed documents for an initial public offering. The information showed that revenue at the social networking company almost tripled in 2012, though it posted a loss in the first half of 2013.

Potbelly Corp said late Thursday its initial public offering of 7.5 million shares had priced at $14 each.

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