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Investors watch for progress on budget impasse; stocks fall

Bloomberg News

NEW YORK: Stocks fell Wednesday as investors watched for progress on ending an impasse over federal spending that shut down the government a second day.

Alcoa Inc. slumped 1.8 percent after Deutsche Bank AG lowered its rating on the aluminum producer. Monsanto Co. dropped 1 percent as the world’s largest seed company gave a full-year earnings forecast that trailed analyst estimates. Global Payments Inc. rallied 11 percent after boosting its earnings forecast.

The Standard & Poor’s 500 index lost 0.1 percent to 1,693.87, trimming an earlier drop of as much as 0.9 percent. The Dow Jones industrial average fell 58.56 points, or 0.4 percent, to 15,133.14.

“The market is trying to figure out how serious the situation in Washington is,” Paul Zemsky, chief investment officer of multi-asset strategies for ING Investment Management, said by phone from New York. His firm oversees $190 billion. “Today’s worry is that it is more serious than we originally thought, which is putting pressure on the market.”

A partial government shutdown lasting one week would probably shave 0.1 percentage point from economic growth, according to the median estimate of economists, with the costs accelerating if the closing persists.

“The impact on the broader economy does start to kick in as the shutdown extends beyond a week, two weeks,” said Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Conn.

A report showed companies added fewer workers than projected in September, indicating the job market is struggling to gain momentum.

The 166,000 increase in employment followed a revised 159,000 rise in August that was smaller than initially estimated, according to the ADP Research Institute.

“U.S. companies — even with all the banter coming out of Washington — we believe are the best-positioned assets in the world,” said Brian Belski, the New York-based chief investment strategist at BMO Capital Markets.

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