U.S. stocks tumbled, causing the Standard & Poor’s 500 Index its biggest two-day loss since June, as concern among investors grew that a deadlock among U.S. lawmakers over the debt limit could be taken to a government default.
The S&P 500 fell 1.2% to 1,655.45 at 4 p.m. in New York, the lowest since Sept. 6. The Dow Jones Industrial Average lost 159.71 points, or 1.1%, to 14,776.53. The Nasdaq Composite Index tumbled 2% to 3,694.83. About 6.9 billion shares changed hands on U.S. exchanges, nearly 20% higher than the three-month average.
“People can talk about a great buying opportunity, or how much money they are waiting to put to work, but were not seeing anyone ready to step in right now,” Matthew Cheslock, a trader with brokerage firm Virtu Financial said for Wall Street Journal. “Scared money will wait until there is something closer to a resolution than we have now.”
Even though the probability of government default is very limited analysts predict increased volatility of the market in coming days. Lawmakers began taking the first steps toward raising the limit even as the discussions didnt find a common ground. Senate Democrats are planning a test vote before the end of this week on a measure that would grant Obama authority to raise the ceiling, probably for a year, unless two-thirds of both chambers of Congress oppose.
In corporate news, The Nasdaq Internet Index retreated 4.1% for the biggest decline since November 2011, as all its 81 members dropped.
Facebook, the worlds largest social network, declined 6.7% to $47.14. The stock had advanced 90% this year through yesterday.
Yahoo declined 3.5% to $32.93, trimming its 2013 gain to 65%.
TripAdvisor Inc., an online travel agent that’s up 71% this year, sank 5.5% to $71.70.
Alcoa gained 1.5% to $8.06 at 5:42 p.m. in New York. The largest U.S. aluminum producer, reported third-quarter profit that surpassed analysts’ expectations after higher earnings from one of its divisions that turns the metal into auto and aerospace parts. The stock fell 0.4% during the regular session today.
Xerox slumped 2.5% to $10.14. The U.S. Securities and Exchange Commission has been probing the accounting practices of Affiliated Computer Services Inc., an outsourcing company acquired in 2010, Xerox said in a regulatory filing.