By Yasin Ebrahim

Investing.com – The S&P 500 slumped Thursday to snap a seven-month win streak as progress by lawmakers to avoid a government shutdown failed to stoke investor appetite to buy the dip. 

The fell 1.2%, the fell 1.6%, or 547 points, the Nasdaq was down 0.44%.

A short-term appropriations measure, which was earlier passed by the Senate, was supported by the House to allow the government to continue operating until Dec. President Joe Biden is expected to sign the bill  and avoid a government shutdown.

However, the drama on Capitol Hill will continue as legislators remain in a deadlock regarding plans to raise debt ceiling. This is to ensure that the U.S. does not default on its obligations. As Sen. Joe Manchin (whose vote was required for Democrats to pass their multitrillion-dollar spending bill without Republican support) is expected to back a $1.5 trillion reconciliation program, which is about 2 trillion less than the $3.5 trillion proposal.   

In addition to the uncertainty surrounding Washington’s developments, sentiment was impacted by economic data that showed a third week of an increase in unemployment claims. This fueled fears and raised concerns about a slower recovery.

Jobless claims increased by 11,000, to 362,000 in the week that ended September 25, despite economists expecting a drop to 330,000.

These stocks that are closely linked to the economy, called Cyclical stock, were among the most volatile as they traded in the red. 

Energy, which is set to end the month positive, was also dragged lower by falling oil prices following data on Wednesday showing an increase in US stocks as production normalized. 

Commerzbank (DE) stated that US crude oil production increased by another 500,000 barrels per week to 11.1 million barrels/day. This can be interpreted as normalization after the hurricane-related outages. 

Investor sentiment is still under pressure and has weighed down the wider market. Tech lost some of its intraday gains against the background of political drama.

Apple (NASDAQ:), Microsoft (NASDAQ:), Amazon.com (NASDAQ:), Facebook (NASDAQ:) and Alphabet (NASDAQ:) the so-called  Fab 5, which make up for about 25% of the S&P 500, were lower.

Tech’s troubles come despite the fact that Treasury yields are experiencing a slowdown, although the 10-year yield has been trending above 1.5%.

On the earnings front, Bed, Bath, & Beyond, Inc. (BBBY) fell 22% after reporting second-quarter earnings of $0.04 that fell well short of Wall Street expectations.

CarMax (NYSE 🙂 reported quarter-end results, which were also below Wall Street expectations, and sent its shares down 11%.