Traders on the floor of the New York Stock Exchange last week. (Scott Eells / Bloomberg )
NEW YORK -- Congress' latest stalemate has predictably rattled markets, sending stocks lower nearly 1% in early trading Monday on Wall Street.
The Dow Jones industrial average was off 124.33 points, or 0.81%, to 15,133.91, as Congress barreled toward the first U.S. government shutdown in nearly two decades.
The broader Standard & Poor's 500 index lost 12.62 points, or 0.75%, to 1,679.13, while the technology-focused Nasdaq composite index was down 27.71 points, or 0.73%, to 3,753.88.
Congressional leaders failed over the weekend to reach agreements over spending and President Obama's healthcare overhaul. If the government shuts down, it would be the first time since the Clinton administration.
And if history repeats itself, investors may be in for steep losses -- at least initially.
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During the Clinton-era shutdown, stocks lost about 4% from mid-December 1995 through early January 1996, according to Sam Stovall, chief equity strategist for S&P Capital IQ.
But after President Clinton and Congress finally reached an agreement and the government reopened, stocks took off, rising more than 10% in the following month, Stovall said.
Many on Wall Street predict a last-minute accord may avert a shutdown. But traders and market analysts could be miscalculating just as they were earlier this month when many bet, incorrectly, that the Federal Reserve would begin tapering its monetary stimulus program at its September meeting.
“The consensus expects them to reach an eleventh-hour agreement, but just as we were wrong about tapering, we could be wrong about this,” Stovall said.
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