US STOCKS-Futures fall as shutdown enters second day

Reuters

* Govt shutdown enters second day with no end in sight

* ADP report may hold extra weight, as some data delayed

* Top Microsoft investors urge Gates to step down

* Futures down: Dow 100 pts, S&P 12.1 pts, Nasdaq 17 pts

By Ryan Vlastelica

NEW YORK, Oct 2 (Reuters) - U.S. stock index futures fell onWednesday as a partial government shutdown in Washington entereda second day, adding to concerns about when the issue might beresolved.

* There were few signs that Congress was making progress inagreeing on a spending bill that would reopen operations. TheDemocratic-led U.S. Senate voted Tuesday to kill Republicans'latest attempts to modify an emergency funding bill, strippingproposed amendments from the spending bill and sending back tothe House a "clean" bill that would fund government agenciesuntil Nov. 15.

* While many investors expect the shutdown will beshort-lived, its impact on economic growth and market volatilitywill likely be greater the longer it continues. Marketparticipants are also watching the situation for an indicationof how an impending debate on the debt ceiling might play out.That issue is considered far more important for the economy, asit could result in an unprecedented debt default if not passed.

* Sectors tied to the pace of economic growth, includingfinancials and materials, were the most volatile amid theuncertainty. Citigroup Inc fell 1.1 percent to $48.05 inpremarket trading.

* S&P 500 futures fell 12.1 points and were belowfair value, a formula that evaluates pricing by taking intoaccount interest rates, dividends and time to expiration on thecontract. Dow Jones industrial average futures fell 100points and Nasdaq 100 futures sank 17 points.

* The S&P 500 is up less than 0.2 percent over thepast two sessions, a slight move that masks the volatility seenthis week. Wall Street plunged on Monday as the deadline to keepthe government open approached, then rebounded on Tuesday onbets the government shutdown would be short-lived.

* Wall Street has managed to avoid steep declines duringsimilar incidents in the past. During the federal governmentshutdown from Dec. 15, 1995 to Jan. 6, 1996, the S&P 500 added0.1 percent. During the Nov. 13 to Nov. 19, 1995, shutdown, thebenchmark index rose 1.3 percent.

* Up to 1 million government workers remained on unpaidleave Wednesday as a result of the closure, with a fight overPresident Barack Obama's healthcare law at the center of theimpasse. In addition, the shutdown delayed the release ofgovernment economic data, including August construction spendingon Tuesday.

* If no deal is reached by Friday, the closely watchedpayroll report will not be released, a prospect that could putmore weight on the ADP employment report, scheduled for releaseWednesday at 8:15 a.m (1215 GMT). About 180,000 private sectorsjobs are expected to have been added in September, up 4,000 fromthe previous month.

* Three of the top 20 investors in Microsoft Corp are lobbying the board to press for Bill Gates to step down aschairman of the software company he co-founded 38 years ago,according to people familiar with matter.

* A J.C. Penney Co shareholder sued the strugglingretailer Tuesday over its surprise decision to issue more than$810 million of stock to shore up liquidity, which led to asteep drop in its share price in after-hours trading.

* The Empire State Realty Trust Inc, which owns theEmpire State Building, said late Tuesday it had sold 71.5million shares in an initial public offering at $13 apiece, atthe low end of its expected range, to raise $929.5 million. Theshares are due to begin trading Wednesday on the New York StockExchange.

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