Budget battle unsettles markets
Stocks lost all the gains they had made midweek, leading to more uncertainty.
NEW YORK - Washington's budget fight jolted Wall Street on Friday, reminding it that the next few weeks could bring a lot of uncertainty.
Investors hate uncertainty, and stocks plunged in an afternoon sell-off that wiped out all the gains from Wednesday's rally after the Federal Reserve kept its huge economic-stimulus program intact.
The Dow Jones industrial average dropped 185.46 points, or 1.2 percent, to close at 15,451.09 - 225 points below the all-time closing high reached after the Fed's announcement.
The Standard & Poor's 500 index fell 12.43 points, or 0.7 percent, to 1,709.91.
The Nasdaq composite fell 14.66 points, or 0.4 percent, to 3,774.73.
All 10 industry groups in the S&P 500 fell, led lower by telecom companies and utilities. The S&P also fell on Thursday, making this its first two-day decline in almost three weeks.
Major indexes were mixed in morning trading Friday but turned lower after the U.S. House of Representatives voted to defund President Obama's health-care law.
The vote itself wasn't a surprise, but it reminded investors that the Republican-led House and the Democratic-controlled Senate are poised for a showdown over spending.
The debt ceiling must be raised by Oct. 1 to avoid a government shutdown, and a potential default on payments, including debt, later in the month.
"What we've done is basically committed ourselves to two weeks of worry," said Sam Stovall, chief equity strategist at S&P Capital IQ.
Until now, September had defied the worriers. The stock market has bounced backed from an August swoon, despite a calendar loaded with potential rally killers. Fears of a conflict with Syria have faded, and Wall Street cheered when Larry Summers withdrew his name as a candidate to replace Fed chairman Ben Bernanke.
Among stocks making big moves Friday, Darden, the struggling parent of Olive Garden and Red Lobster, fell $3.52, or 7 percent, to $45.78 after posting a much lower quarterly profit.