US STOCKS-Futures point to lower open as shutdown continues

Reuters

* Government shutdown enters second day; no end in sight

* ADP report shows fewer jobs added in Sept than expected

* Monsanto drops in premarket after fourth-quarter loss

* Futures down: Dow 100 pts, S&P 11.1 pts, Nasdaq 15.5 pts

By Ryan Vlastelica

NEW YORK, Oct 2 (Reuters) - U.S. stock index futures pointedto a lower open on Wednesday as a partial government shutdown inWashington entered a second day, adding to concerns over howsoon a political compromise would be reached.

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, and sent a"clean" measure back to the House of Representatives that wouldextend funding for government agencies until Nov.15.

U.S. Treasury Secretary Jack Lew said late Tuesday theTreasury had started using its final tools to push back the datewhen the government will run out of legal borrowing authority.

The shutdown's impact on economic growth and marketvolatility will likely increase 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.

"There's a sense that the debate isn't going to end soon.Yesterday's rally was driven by a hope this wouldn't last, butthat hope is diminishing," said Oliver Pursche, president ofGary Goldberg Financial Services in Suffern, New York.

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.

Data released Wednesday by a payrolls processor showed U.S.private employers added 166,000 jobs in September, belowexpectations for 180,000 jobs. Investors may place more weightthan usual on the report as government data will not be releasedduring the shutdown. Friday's key payroll report will be delayedif no deal is reached by then.

S&P 500 futures fell 11.1 points and were below fairvalue, a formula that evaluates pricing by taking into accountinterest rates, dividends and time to expiration on thecontract. Dow Jones industrial average futures fell 100points and Nasdaq 100 futures sank 15.5 points.

The S&P 500 has gained 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 Tuesday on betsthe 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.

"Putting aside short-term volatility, which we're certain toexperience as the shutdown continues, markets should reboundvery quickly once we get past this," said Pursche.

Up to 1 million government workers remained on unpaid leaveWednesday as a result of the closure, with a fight overPresident Barack Obama's healthcare law at the center of theimpasse.

Monsanto Co reported a fourth-quarter loss that waswider than expected, and offered a reduced outlook for 2014 evenas it said it was positioned for strong growth next year. Sharesfell 2 percent in premarket trading.

Three of the top 20 investors in Microsoft Corp arelobbying the board to urge Bill Gates to step down as chairmanof the software company he co-founded 38 years ago, according topeople familiar with matter.

Shares of Alcoa Inc fell 2.8 percent to $7.94 inpremarket trading after Deutsche Bank downgraded the stock to"sell" from "hold." The firm upgraded Barrick Gold Corp to "buy," sending the company's U.S. shares up 1.6percent to $18.32 before the bell.

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