Monday Morning Market Roundup: Shutdown, Debt Ceiling & Missed Payments?

We have three big issues to deal with this week. Here’s how markets are starting out:

Stocks:

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U.S. stock futures are falling sharply as the federal government careens toward a partial shutdown.

Dow Jones industrial futures are down 126 points to 15,069. S&P futures have lost 13.9 points to 1,672.50, and the index could see its first back-to-back trading days below 1,700 in three weeks. Nasdaq futures are down 22.75 points to 3,200.25.

The Senate reconvenes Monday just 10 hours before the shutdown is initiated.

A budget resolution is one of the four huge pivot points in the coming month, with the other three arriving within the next eight trading days.

On Friday, the government releases its jobs report for September. The earnings seasons opens on Oct. 8 when Alcoa reports third-quarter results and on the following day, the U.S. Federal Reserve opens its policy meeting.

Oil:

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The price of oil fell sharply on Monday, to below $102 a barrel.

By early afternoon in Europe, the benchmark oil contract for November delivery was down $1.36 to $101.51 a barrel in electronic trading on the New York Mercantile Exchange. The contract fell 16 cents to close at $102.87 a barrel on Friday.

Goldman Sachs estimates that a three-week government shutdown would slow the economy's annual growth rate in the October-December quarter by up to 0.9 percentage points. If so, the growth rate next quarter would be a scant 1.6 percent, compared with market expectations of a 2.5 percent growth.

Political uncertainty also surfaced in Italy, where Prime Minister Enrico Letta will face a confidence vote on Wednesday after ministers from Silvio Berlusconi's center-right bloc pulled out of the five-month government. Markets are concerned that key economic reforms will not be implemented if the government falls.

After climbing to over $110 in late August, the price of oil has been mostly falling for three straight weeks as diplomatic efforts surrounding Syria and Iran eased concerns about Middle East supplies.

Brent crude, the benchmark for international crudes used by many U.S. refineries, was down 77 cents to $107.86 a barrel on the ICE Futures exchange in London.

Markets:

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The Associated Press contributed to this report.

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