US STOCKS-Wall St down with little progress in Washington

Reuters

* Some progress, but no clear sign of end to fiscal impasse

* Utilities showing worst decline among S&P sectors

* Indexes off: Dow 0.5 pct; S&P 0.4 pct; Nasdaq 0.3 pct

By Julia Edwards

NEW YORK, Oct 14 (Reuters) - U.S. stocks were down on Mondayon disappointment from investors that weekend talks did notresolve an impasse that threatens a possible U.S. default thatlooms three days away.

U.S. stocks had risen sharply ahead of the weekend on hopesa deal was near to raise the $16.7 trillion federal borrowinglimit. Failure to raise the debt ceiling would leave the world'sbiggest economy unable to pay its bills in the coming weeks.

Senate Majority Leader Harry Reid and Republican leaderMitch McConnell held talks that Reid later called "substantive."Reid did not provide details, but his remarks gave some hopethat Congress soon might pass legislation to fund the governmentand raise its borrowing authority.

All ten sectors on the S&P were down. The S&P utilitiesindex was the worst decliner, down 1.3 percent. ExelonCorp. fell 1.7 percent, despite utilities generallybeing seen as safe stocks for investors during economicuncertainty, most likely due to the sector's tie to interestrates.

"No sector is safe and as interest rates go up in otherparts of capital markets, the dividends of utilities don't lookas attractive," said Ron Florance, deputy CIO for investmentstrategy at Wells Fargo Private Bank.

The S&P 500 index is still above its 50-day moving average.The moving average represents a measure of the near-term trendin the market. Once the index falls convincingly below the50-day moving average, investors often will sell shares.

"I think people are doubting the 17th," said Florance. "Idon't think there is any Wall Street belief that the federalgovernment is actually going to default on their bonds. Thereare other mechanics that they can use in this mess, butinvestors are just exhausted with this irresponsibility."

In addition, the government shutdown, entering its thirdweek, was seen as a drag on the economy by shaving a smallpercentage off the GDP with each passing day.

The Dow Jones industrial average was down 69.94points, or 0.46 percent, at 15,167.17. The Standard & Poor's 500Index was down 7.30 points, or 0.43 percent, at 1,695.90.The Nasdaq Composite Index was down 10.57 points, or0.28 percent, at 3,781.30.

Both the Senate and House are scheduled to be in session onMonday, even though it is the Columbus Day federal holiday. Noeconomic data and major earnings were due Monday.

Also pressuring the market was trade data from China, which showed an unexpected decrease in exports in September, theweakest performance in three months. Another set of data showedChinese consumer prices rose faster than expected in September.

Netflix Inc shares rose 3.9 percent at $312.81after the Wall Street Journal reported that the company is intalks with several U.S. cable television companies, includingComcast Corp and Suddenlink Communications, to make its streaming video service availablethrough their set-top boxes.

Expedia Inc shares were off nearly 8 percent at$47.74 after a rating cut by Deutsche Bank AG.

Major companies will resume reporting third-quarterearnings. On Tuesday, earnings are expected from Citigroup Inc, Coca-Cola Co, Johnson & Johnson, and IntelCorp.

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