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Wall Street falls on govt shutdown fears, oil swoon; Dow, S&P end flat

The benchmark S&P 500 ended on Monday at a 14-month low

Reuters  |  New York 

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A souvenir license plate is seen outside the New York Stock Exchange in Manhattan, New York. Photo: Reuters

US stocks gave up their gains on Tuesday as energy stocks were weighed by a steep drop in and as the possibility of a partial government shutdown loomed.

US Senate Majority Leader Mitch McConnell said Democrats had rejected his spending bill proposal. Without the passage of a spending bill, several government agencies are at risk of a shutdown.

Meanwhile, tumbled more than 5 percent on concerns of U.S. oversupply. energy stocks <.SPNY> fell 2.4 percent as a result.

"In the short run, there's a heightened state of anxiety based off of whether there's a government shutdown or not, which is adding a layer of uncertainty to overall financial as well as the US economy," said Chad Morganlander, senior portfolio manager at Washington Crossing Advisors in Florham Park, New Jersey.

The benchmark ended Monday at a 14-month low. The index has struggled to hold onto gains in a particularly volatile December in the backdrop of worries about global growth, rates and the China-U.S. trade war.

Even as US stocks rose earlier in Tuesday's session, both US Treasury prices and the Cboe Volatility Index, often referred to as Wall Street's "fear gauge," rose.

"That tells me it's a very, very nervous market," said J.J. Kinahan, chief market strategist at TD Ameritrade in Chicago.

The Federal Open Market Committee began a two-day meeting in which it will decide upon its course of interest-rate hikes, on Tuesday. Market participants widely expect the Fed Reserve to raise benchmark U.S. rates this month, but some investors anticipate that the U.S. central bank will indicate fewer rate hikes for 2019 than previously expected.

The Industrial Average fell 28.22 points, or 0.12 percent, to 23,564.76, the lost 12.2 points, or 0.48 percent, to 2,533.74 and the Composite dropped 4.65 points, or 0.07 per cent, to 6,749.08.

Despite Tuesday's losses, several stocks managed to reverse a pattern of declines.

Group Inc shares rose 1.7 percent to snap a nine-day losing streak related to the 1MDB scandal.

Shares of Boeing Co rose 3.5 per cent after three days of losses as the aerospace company said it was raising its dividend and increasing share buybacks to $20 billion from $18 billion.

rose 0.7 percent, after a near 13 percent drop over two days on a Reuters report that J&J knew for decades that its Baby Powder contained asbestos.

Declining issues outnumbered advancing ones on the by a 1.18-to-1 ratio; on Nasdaq, a 1.43-to-1 ratio favoured decliners.

The S&P 500 posted no new 52-week highs and 84 new lows; the Composite recorded eight new highs and 479 new lows.

First Published: Wed, December 19 2018. 02:19 IST