(Reuters) – U.S. stocks declined on Friday, with the S&P 500 and Dowon track for their first weekly drop in four, as debt and budget negotiations by lawmakers in Washington continued.
The S&P is roughly 2 percent below its record high set last week and is facing resistance at its 14-day moving average, now at about 1,699.
Time was running short for lawmakers to avert a partial shutdown of operations by the U.S. government on October 1 as Congress struggled to pass an emergency spending bill Republicans want to use to achieve Tea Party-backed goals, such as defunding the new healthcare reform law.
The Senate on Friday was on track to pass legislation to keep the federal government operating beyond midnight Monday.
“I’ve seen the movie almost every couple of years, the movie always ends the same way – the politicians figure it out at the last minute,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.
“Markets gets all scared in the meantime.”
In the latest comments from Fed officials after last week’s surprise decision by the central bank to preserve its stimulus measures, the president of the Federal Reserve Bank of Chicago, Charles Evans, said the Fed could start reducing its asset purchases this year based on economic forecasts but the decision to wind back stimulus could be pushed into next year.
Minneapolis Fed President Narayana Kocherlakota told Reuters the Fed needs to speak more clearly and tell the world it will do “whatever it takes” to boost employment, and not send the message that a very slow drop in joblessness is satisfactory.
Data showed U.S. household spending rose in August 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, while consumer sentiment slid in September to its lowest in five months.
