* Possibility of budget deal before midnight seen as remote
* All S&P 500 sectors fall; energy drops
* Major indexes still on track for positive September
* Indexes down: Dow 0.68 pct, S&P 0.55 pct, Nasdaq 0.38 pct
By Chuck Mikolajczak
NEW YORK, Sept 30 U.S. stocks fell on Monday as
the chance of a last-minute deal to resolve a budget impasse in
Washington appeared dim, moving the government closer to a
Losses were broad, with each of the ten major S&P 500
sectors lower on the day, led by energy and financials shares.
But the S&P 500 index managed to cut its initial losses
almost in half, as market participants have grown accustomed to
political battles in Washington resulting in a last-minute
"Quite frankly, ultimately there will be some kind of
compromise in Washington. I don't think there will end up being
an extended government shutdown," said Stephen Massocca,
managing director, Wedbush Equity Management LLC in San
"Everyone always hardens their positions right before a
The House of Representatives early on Sunday voted for an
emergency spending bill that includes a one-year delay of
President Barack Obama's signature healthcare overhaul despite
threats of a veto from the White House. The
Democratic-controlled Senate reconvenes on Monday at 2 p.m.
A shutdown would have wide-ranging implications for a most
types of assets. If a deal is reached quickly, markets might
recover, but a prolonged shutdown could do significant harm to
the economy and consumer confidence. While a deal could still be
reached before the government's fiscal year ends at midnight on
Monday, such a possibility was considered unlikely.
Up to 1 million government employees could be furloughed
without a deal and, if the shutdown takes place, the Labor
Department will postpone issuing its closely watched monthly
employment report scheduled for Friday.
Energy shares slumped 1.1 percent, dropping
alongside a 1 percent fall in U.S. crude oil prices as the
possible government shutdown stoked demand concerns. Exxon Mobil
fell 1.1 percent to $85.92 while Occidental Petroleum
sank 1.7 percent to $92.83.
Defense names also declined, as a government shutdown would
most likely diminish the amount of new contracts being granted.
Raytheon Co fell 1.1 percent to $77.35 and Alliant
Techsystems Inc lost 1 percent to $97.20. The PHLX
defense sector declined 0.7 percent.
The Dow Jones industrial average fell 104.17 points
or 0.68 percent, to 15,154.07, the S&P 500 lost 9.25
points or 0.55 percent, to 1,682.5 and the Nasdaq Composite
dropped 14.41 points or 0.38 percent, to 3,767.19.
Reflecting the uncertainty in Washington, the CBOE
Volatility index gained 9.39 percent. The index has risen
more than 20 percent in the last three sessions.
The S&P managed to find support at its 50-day moving average
of 1,679.96, breaking below that level then quickly rebounding.
For September, the Dow is up 2.3 percent, the S&P is
up 3 percent and the Nasdaq is up 4.9 percent.
The Chicago Purchasing Managers index rose more than
expected in September, climbing to 55.7 from 53 in the previous
month. Analysts were expecting a reading of 54. The positive
data had little lasting impact on the market's gloomy tone.
In company news, Active Network Inc jumped 25.9
percent to $14.35 after the company said it would be taken
private by Vista Equity Partners for $1.05 billion.