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Calm Before the Storm? Markets Withstand Washington Wrangling Rather Well

Calm Before the Storm? Markets Withstand Washington Wrangling Rather Well

Stocks fell Monday as it became more likely that U.S. lawmakers would fail to come up with temporary stopgap spending legislation in time for Tuesday's deadline.

However, considering that the current shutdown fight may lead to something much more dangerous (i.e. the debt ceiling fight that may lead to the Treasury Department defaulting on its payments), stocks did not fall as hard as expected.

The Dow Jones industrial average fell 128.57 points, or 0.8 percent, to close at 15,129.67:

The Standard & Poor's 500 fell 10.20 points, or 0.6 percent, to 1,681.55:

The Nasdaq fell 10.12 points, or 0.3 percent, to 3,771.48:

The decreases come after months of extreme highs and record-breaking activity in the three major indices in the United States. Washington gridlock has surely contributed to the decline.

Now keep in mind a government shutdown will have little (if any) affect on the overall economy. It’s the debt ceiling fight that has economists worried – and that’s precisely why some are cheering a shutdown.

They hope that a shutdown will force lawmakers to get serious about the nation’s debt limit. Failure to do so before the Treasury Department defaults on its payments could throw the U.S. into unchartered and potentially disastrous waters.

The government would run out of borrowing authority by Oct. 17, according to Treasury Secretary Jack Lew

Still, despite these fears, the bond market was relatively calm Monday. Do the markets know something we don’t? Or is this just the calm before the storm?


Follow Becket Adams (@BecketAdams) on Twitter

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