/https://specials-images.forbesimg.com/imageserve/6155f5e47ad3a6f16910b0ee/0x0.jpg?cropX1=0&cropX2=3001&cropY1=68&cropY2=1757)
[ad_1]
Top line
Shares fell sharply on Thursday afternoon as lawmakers in Washington, DC struggled to accept the spending measures that investors had been anticipating for weeks, with a key Democratic senator saying he would only support one vast social spending program encompassing many of President Joe Biden’s policies. priorities if the price is reduced by more than half.
Lawmakers face a series of critical deadlines in the coming weeks as they rush to avoid a … [+]
Getty Images
Highlights
Although stocks started the day with modest gains, the Dow Jones Industrial Average fell 466 points, or 1.4%, to 33,924 by 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-rich Nasdaq fell 0.3%, placing each index about 5% below all-time highs set earlier this month – this.
Shares began to fall shortly before noon Thursday, as House Speaker Nancy Pelosi (D-Calif.) Reiterated her intention to move forward with a vote on a bipartisan infrastructure proposal of 1 , $ 2 trillion despite opposition from House progressives, who insisted they would only support the Senate Bill once the Senate moves forward on a 3 $ 500 billion, which funds initiatives to fight climate change and expand social security benefits.
The losses worsened after Sen. Joe Manchin (DW.Va.), whose vote is crucial given the lead of a House Democrat vote, announced his support for reducing the total price of the giant bill to 1.5 trillion dollars.
Adding to the uncertainty, Manchin also conditioned its support for the Federal Reserve ending its unprecedented pandemic-era stimulus efforts, which have helped the market reach new highs and include historically low interest rates and monthly asset purchases of $ 120 billion to inject liquidity into the economy and help support spending.
Consumer Staples and Industrials, two sectors that climbed in anticipation of increased budget spending, suffered losses in the S&P on Thursday afternoon, falling 1.5% and 1.4% respectively .
Key context
Lawmakers face a series of critical deadlines in the coming weeks as they rush to avoid a looming government shutdown and debt default, as Democratic leaders try to push forward the agenda. Biden. In addition to the infrastructure vote scheduled to take place on Thursday, the Senate is expected to vote on a debt ceiling suspension measure for another year as early as next week. On Tuesday, Treasury Secretary Janet Yellen, who warned the potential default could trigger an “economic catastrophe,” said the department would likely exhaust its ability to pay the country’s bills by Oct. 18, but Republicans have so far insisted they won’t back not the bill passed by the House, insisting that Democrats should instead wrap the measure in a budget plan to be passed on on a one-party basis using a special process called reconciliation. Schumer, however, rejected the option on Thursday, saying the “long and unpredictable process” could take too long and “unnecessarily endanger our country’s stability.”
What to watch out for
The House and Senate are expected to pass an interim funding measure to avoid a government shutdown Thursday afternoon, leaving enough time for the bill to reach Biden’s office before current funds expire at midnight.
Tangent
In an afternoon note, market analyst Adam Crisaffuli, founder of Vital Knowledge Media, said he was “very concerned” about the “serious episode of deadlock” in Washington that could force lawmakers to cut spending more than investors expected. Although Crisafulli believes 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 is obviously negative.”
Further reading
Republicans block Democratic efforts to raise debt ceiling as officials warn of economic disaster (Forbes)
Yellen warns Treasury may run out of liquidity on October 18, causing “serious damage” to businesses (Forbes)
[ad_2]
