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US stocks drop amid fears of government shutdown

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As a government shutdown looms over the federal budget in the United States, stocks in the country fall sharply and global investors cut allocation to US equities and bonds.

All 10 main industries of Standard & Poor’s 500 index dropped on Monday. Microsoft Corp. led the declines with a 1.1 percent fall among the largest companies while shares in finance, telephone and energy tumbled the most.

Dow Jones Industrial Average fell 112.04 points, or 0.8% while Nasdaq Composite declined 16.71 points, or 0.6 percent.

“We’ve been down this road before. It’ll last until there’s some disruption or event that’ll cause outrage in the public and then the politicians snap in line to settle it,” said Tim Hartzell, a chief investment officer at Sequent Asset Management, according to Bloomberg.

Some 54 global investors across the US, Europe, and Japan cut allocations to US stocks to a 4-month low of 41.7 percent, Reuter’s September global asset allocation poll showed Monday.

Also contributing to the US stock fall are growing concerns over US monetary and fiscal policies this month as investors wait to see when the US central bank will withdraw its huge monetary stimulus and by how much.

The US government is bracing on Monday for its first shutdown in 17 years as there is little hope of finding a compromise in Congress to keep the government funded.

Republicans do not consider the only plan President Barack Obama accepts. And Obama do not allow Republican lawmakers to dismantle any part of his Affordable Care Act, known as Obamacare.

If the government shuts down on Monday night, Washington will probably lose an estimated $200 million a day.

The shutdown will also affect jobs of more than 800,000 federal workers. Millions more could also be working without paychecks.


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