Strategists said the renewed sell-off in U.S. markets is in part thanks to partisan gridlock in Congress over the debt ceiling and government shutdown, CNBC reported. House Speaker Nancy Pelosi (D-Calif.) said that the House will this week pass a government funding bill and a debt ceiling suspension. The bigger hurdle is likely the Senate, where lawmakers will need to muster 60 votes to pass such a bill that isn’t tied to the separate reconciliation legislation. The U.S. stock market is on track to post its worst day in months. And U.S. politics are in part to blame. As the Dow Jones Industrial Average fell 614 points on Monday — its worst day since July — and the S&P 500 shedding 1.7%, strategists say gridlock on Capitol Hill is starting to send shutters through the market. The S&P 500 on Monday notched its worst session since May. Dan Clinton, head of policy research at Strategas Research Partners, wrote that Wall Street is increasingly convinced lawmakers won’t address the debt ceiling anytime soon. “Much of this is short-term risk and headline risk, but the framework of Washington policy is shifting to more risk after 18 months of unlimited fiscal and monetary policy,” he wrote. “Consensus now believes that the debt ceiling will be raised in the second half of October, meaning a last-minute move, and another month of talk of debt ceiling breaches and prioritization of government spending if the debt ceiling is not lifted.” If Congress fails to suspend or raise the borrowing limit before the so-called drop-dead date, the U.S. government will default for the first time. The Treasury Department doesn’t have a precise “drop-dead” date right now, but estimates that it’s likely some point in October. House Democrats plan to hold a vote this week on a piece of legislation that would suspend the limit and fund the government for a matter of months beyond the close of the fiscal year when it ends Sept. 30.
