Investors bet on last-minute deal to end fiscal showdown
By Angela Moon
NEW YORK (Reuters) - With a possible U.S. government shutdown days away, Wall Street still hasn't come down with a critical case of fiscal fever despite forecasts that failure to resolve the federal budget standoff could be catastrophic.
The benchmark S&P 500 is up more than 3 percent for September, which has traditionally been described as the worst month for stocks and was just 2 percent off its all-time high.
"Part of the calmness comes from the fact that investors have seen this before," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.
The market expects agreements will be reached, even if they come down to the wire, he said.
Time was running short for lawmakers to avert a partial shutdown of the government beginning Tuesday when the new fiscal year begins. Congress was struggling to pass an emergency funding bill, but Tea Party-backed Republicans in the House sought to use the must-do bill to gut the new healthcare overhaul known as Obamacare or enact other Tea Party policies.
The Democrat-majority Senate passed a funding bill without attachments on Friday, but the situation remained fluid. The Republican-controlled House could vote on a bill in an unusual Saturday or Sunday session. President Barack Obama called on the House on Friday to stop "political grandstanding" and pass the legislation.
If the government does shut down non-essential operations on Tuesday, the Labor Department said it will not issue its monthly employment report scheduled for next Friday.
An extended government shutdown, or even worse, a debt default, could harm the market's reputation by rekindling memories of 2011 when similar political infighting prompted the loss of the United States' triple-A credit rating and was the primary driver of the stock market's last full-on correction. Continued...