By LGR Financial News Staff
The S&P 500 fell for a fourth straight day, and the market to end mostly lower on Thursday, as buyers stepped back to wait out lawmakers in Washington who are trying to hash out an agreement on the deficit.
The wrangling over the U.S. deficit has boosted volatility as stocks fell throughout the day, leaving insiders saying that investors are skeptical a key vote by Congress would lead to a deal to avoid a default.
The Dow Jones industrial average ended down 62.44 points, or 0.51 percent, at 12,240.11. The Standard & Poor’s 500 Index was down 4.22 points, or 0.32 percent, at 1,300.67 points, or 0.05 percent, at 2,766.25, leaving the S&P 500 down 3.3 percent on the week.
The dollar also dropped toward a postwar low against the yen and the yield on 10-year Treasury notes fell 0.02 percentage point to 2.96 percent..
“During the course of the day, it became clear that even if (Republican House Speaker John) Boehner does get the vote, when it’s turned over to the Senate, the Senate is going to reject it. That seems to be the reason for the selling into strength,” said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.
A vote on a Republican sponsored bill to raise the debt limit was expected after the close of trading today in the U.S. House of Representatives. However the Democratic-controlled Senate is also offering up a competing bill, and Democratic leaders have said the House bill will be defeated in the Senate. Analysts also cite dissension among the ranks of GOP lawmakers as reason investors are less certain that a deal to avoid defaulting on the debt can happen.
Even if a deal is reached and the U.S. doesn’t default, investors are, as well, worried that the country might lose its triple-A credit rating. That could raise interest rates and possibly slow down the U.S. economy, which is still recovering from the worst recession in decades.