Trading intensified tuesday as the U.S. house of Representatives grappled โคwithโค averting a government shutdown hours โbefore a midnight โdeadline, injecting volatility into markets already sensitiveโ to rising โinterest rates and global economic uncertainty. The dow Jones Industrial Average closed down 336.33 points, or 0.98%, at 34,299.33, โคtheโฃ S&P 500 fell 0.70% โคto 4,369.71 and the Nasdaq Composite dropped 0.60% to 13,533.05.
A shutdown would halt non-essential government โขservices, possibly delaying economic data releasesโ and impacting consumer confidence. While pastโข shutdowns have had limited long-term โeconomic impact, the โcurrent habitat – marked by inflation, geopolitical tensions, and โฃa Federal Reserve โฃdetermined โคto โcurb spending – amplifies the risk. โฃInvestors are particularly focused on the potential for aโค prolonged impasse,โฃ wich could โขfurther destabilize โฃmarketsโค and complicate the Fed’s monetary policy decisions.
Theโข immediate trigger is a disagreement โฃover government funding levels,โค with โขhardline Republicansโค demanding deeper spending cuts than Democrats โand โคPresident Biden areโข willing to accept. House Speaker Kevin McCarthyโค faces a challenge balancingโ the demands of his party’s โคconservative wing with the need to avoid a shutdown.A short-term continuing resolution, extending current funding levels,โฃ appeared to be the most likely โpath to avoid immediateโ disruption as of late Tuesday, but its passage remained uncertain.
Treasury yields rose, with the 10-year Treasury note hitting 4.58%,โ reflecting investor concerns about increased โฃborrowing costs andโค potential inflationary pressures. Oil prices โalso edged higher, as a potential shutdown could โคdisrupt energy markets.
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