(Reuters) – U.S. stocks were lower in early afternoon trading on Wednesday after President Donald Trump warned of a government shutdown to secure funds to build the Mexico border wall, adding to nerves as the deadline to raise the U.S. debt ceiling looms.
Wall Street analysts estimate Congress has just 12 working days when it returns from its summer recess on Sept. 5 to raise the debt ceiling before the U.S. Treasury exhausts the last of its options to remain current on all of the federal government’s obligations.
Credit ratings agency Fitch Ratings said a failure by U.S. officials to raise the ceiling in a timely manner would prompt it to review its rating on U.S. sovereign debt, “with potentially negative implications.”
“Trump saying he would be willing to shut down the government over the wall obviously doesn’t really inspire much confidence in anyone,” said Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.
“The debt limit, which is truly urgent and something that needs to be addressed, where theoretically failure should not be an option, that is something of a litmus test for the market.”
Investors have grown increasingly concerned about Trump’s ability to legislate his pro-growth agenda given the near constant political rumblings in the White House.
At 12:39 p.m. ET (1639 GMT), the Dow Jones Industrial Average .DJI was down 48.74 points, or 0.22 percent, at 21,851.15 and the S&P 500 .SPX was down 5.61 points, or 0.23 percent, at 2,446.9.
The Nasdaq Composite .IXIC was down 15.50 points, or 0.25 percent, at 6,281.98.
The CBOE Volatility index .VIX, a widely followed measure of market anxiety, increased 0.61 points to 11.95, set to rise for the first time in four days.
Investors are also jittery ahead of Federal Reserve Chair Janet Yellen’s speech in Jackson Hole, Wyoming, on Friday, which will be scrutinized for clues on the central bank’s stand on monetary policy.
Also weighing on sentiment was data that showed new U.S. single-family home sales unexpectedly fell in July to a seven-month low.
Six of the 11 major S&P indexes were lower, with consumer discretionary index’s .SPLRCD 0.88 percent fall leading the decliners.
Lowe’s (LOW.N) fell as much as 6.7 percent, on course for its worst day in more than five years, after the home improvement chain’s disappointing results and forecast.
Bigger rival Home Depot (HD.N) dropped 1.34 percent.
Shares of advertising firm Omnicom (OMC.N) dropped more than 5 percent, while Interpublic Group (IPG.N) fell 4.5 percent after WPP (WPP.L) cut its sales forecast. WPP’S U.S.-listed shares (WPPGY.O) sank about 12 percent..
Advancing issues outnumbered decliners on the NYSE by 1,625 to 1,149. On the Nasdaq, 1,389 issues fell and 1,377 advanced.
Reporting by Sruthi Shankar in Bengaluru; Editing by Savio D’Souza