Stocks to see more volatility from shutdown

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ReutersReuters – Fri, Oct 4, 2013 5:23 PM EDT

By Caroline Valetkevitch

NEW YORK (Reuters) - U.S. stocks are likely to face another week of rising turbulence as efforts to settle the budget dispute in Washington drag on, leaving investors worried about the more critical issue of raising the U.S. debt ceiling.


The larger issue for investors is that efforts to solve the budget problem could become entangled with the issue of raising the debt limit. If the $16.7 trillion borrowing cap is not increased, it could lead to a possible U.S. default.

"It's not likely, but it's certainly a remote possibility. That is the big fear, because that's an event that has not been discounted by the market," said Quincy Krosby, market strategist at Prudential Financial in Hartford, Connecticut. "And it's not just a domestic event; it's a global event."


The Treasury has said the United States will exhaust its borrowing authority no later than October 17. Republican House Speaker John Boehner told his party colleagues he would work to avoid a U.S. debt default, according to reports, helping stocks on Friday. But there is little hard evidence that the stand-off is nearing a resolution.