NEW YORK (TheStreet) -- Major U.S. stock averages fell Monday as investors feared the stalling budget talks in Washington over the Patient Protection and Affordable Care Act, popularly known as Obamacare, will destroy the country's international credibility and plunge the global economy into another recession.
The S&P 500 lost 0.85% to 1,676.13. The Dow Jones Industrial Average dropped 0.91% to 14,936.11. The Nasdaq was giving up 0.98% to 3,770.38.
More than 800,000 federal workers have been into on unpaid leave for a week week as lawmakers wrangle over President Barack Obama's signature healthcare law, fueling increasing concerns that the protracted debate will be inextricably linked to discussions about the U.S. debt ceiling.
Failure to forge an agreement could put the country at risk of defaulting on its bills and roiling global financial markets. The day's pullback, while not trivial, was nonetheless small enough to give investors confidence that some sort of a deal will be reached.
"There's still not a panic in the market," said Quincy Krosby, market strategist at Prudential Financial. "You're not looking at a run for the exits; the volume is fairly light."
House Speaker John Boehner warned Sunday on ABC's "This Week" program that a budget deal won't be passed in the House without concessions to the health care law, enacted by Congress in 2010.
"Congress and the President are playing a 'Rebel Without a Cause' style game of chicken at the moment, and equity markets are stuck in the middle," Nicholas Colas, chief market strategist at ConvergEx Group, a global brokerage company based in New York, said in his daily remarks. "It may not come to that, of course, but the "Market Selloff Forces Washington to Act" headline seems more base case than outlier expectation as we wind our way to October 17."