U.S. equity markets fell sharply Thursday, Dec 20, on signs that President Trump won't sign legislation that would avoid a partial government shutdown on Saturday without providing funding for a physical barrier on the border of the U.S. and Mexico.

"The President has informed us he will not sign the bill that came down from the Senate,"  said Speaker of the House Paul Ryan (R-Wis.), who went to the White House shortly after noon in a bid to resolve the impasse. He said legislators would try again to find a compromise that the President would agree to.

The Senate passed a spending bill Wednesday night that would fund most of the government through Feb. 8, 2019. House Republican leaders had hoped to advance an identical measure on Thursday morning but criticism from some conservative members and negative coverage from right-wing media appears to have doomed those plans.

Trump has taken conflicting views on the subject in recent days, including telling senior Democratic congressional leaders that he would be "proud" to shut the government down unless $5 billion of funding was provided for a border wall that he has promised in the past would be paid for by Mexico. Keeping that promise is regarded as essential to the preservation of his political base.

A partial government shutdown could affect hundreds of thousands of federal employees, with workers facing furloughs and working without pay, depending on how much of the bureaucracy Congress agrees to fund in the next nine days.

For example, the U.S. Secret Service agents protecting Trump during his upcoming 16-day vacation at his Florida country club wouldn't be paid during a shutdown. Transportation Security Agency personnel working at airports through the holiday season would also stay on the job during a shutdown, also without getting paid until after the matter is resolved.

"If a shutdown were to take place so far into the fourth quarter, some economic activity would not have time to bounce back," economists at S&P Global wrote in a note. "This could worry investors as well as consumers, potentially increasing market volatility on the back of a Fed rate hike and snuffing out some economic activity this quarter."

About 420,000 federal employees deemed "essential" would work through a shutdown, ensuring that certain operations in government would go on. That includes federal employees at the Department of Homeland Security, where 54,000 border patrol employees and 53,000 Immigration and Customs Enforcement employees would work through a shutdown, though with their pay delayed.

More than 380,000 federal employees face unpaid time off, though Congress could pass legislation to pay workers for any pay missed as a result of furloughs.

The Dow Jones Industrial Average fell more than 400 points to below 23,000 for the first time since October 2017 at midday Thursday. The Nasdaq slipped 2%, extending its worst quarter in 10 years, and the S&P 500 lost 1.6%.

"Betting the holiday budget decision on a rational U.S. government might be a risky proposition heading into the new year," the S&P economists wrote.