Stocks Fall as Government Shutdown Draws Nearer

Richard Drew/AP

Stocks fell again Friday to close out Septembers first down week as investors fretted over the looming possibility of a government shutdown. The Dow Jones industrial average (^DJI) lost 70 points, or 0.5 percent, to 15,258, the Standard & Poor's 500 index (^GPSC) fell 7 points, or 0.4 percent, to 1,691 and the Nasdaq composite index (^IXIC) dropped 6 points, or 0.2 percent, to 3,781. The Senate passed legislation to keep the federal government operating beyond midnight Monday. It remains unclear, however, whether the Democratic-led Senate and the Republican-run House will be able to craft a compromise and rush it to President Barack Obama for his signature before the government has to tell hundreds of thousands of federal workers to stay home, starting Tuesday. In the latest comments from Fed officials after last week's surprise decision by the central bank to continue its stimulus measures at full power, the president of the Federal Reserve Bank of Chicago, Charles Evans, said the Fed could still start reducing its asset purchases this year based on economic forecasts, but that the decision to wind down stimulus could be pushed into next year Investors also dealt with mixed economic signals from two new reports Friday.

Data from the Commerce Department showed U.S. household spending rose in August rose as incomes increased at their fastest pace in six months, a sign that momentum could be picking up in the U.S. economy despite months of harsh government austerity. On the other hand a University of Michigan survey showed that consumer confidence declined in September as Americans worried about the possible government shutdown and their own finances. The survey also found that half of households expect no pay increase in the year ahead. In commodities news, benchmark U.S. crude fell 16 cents to close at $102.87 a barrel, while gold rose rose $15.10 an ounce to $1,339.20. In corporate news, BlackBerry (BBRY) said it was committed to completing a series of major changes quickly after reporting Friday that it lost $965 million on revenue of $1.6 billion. The troubled smartphone company's financial results were in line with the the figures it released last week, when it warned investors to expect dismal earnings and announced 4,500 layoffs. Fairfax, BlackBerry's largest shareholder, subsequently announced it plans to make an offer for Blackberry and is trying to attract other investors. BlackBerry canceled its conference call with analysts Friday in light of that overture. It gained 1 percent, to close at $8.03.