US STOCKS-Wall St falls on jobs data, Day 2 of government shutdown

Reuters

* Consumer staples lead decliners, all 10 sectors lower

* Report shows fewer private-sector jobs added in Sept. thanexpected

* Monsanto's stock drops after fourth-quarter loss, loweroutlook

* Indexes down: Dow 0.6 pct, S&P 0.5 pct, Nasdaq 0.3 pct

By Julia Edwards

NEW YORK, Oct 2 (Reuters) - U.S. stocks fell on Wednesday asa partial U.S. government shutdown entered its second day anddata showed private employers added fewer jobs than expected inSeptember.

All ten S&P 500 sectors were lower, with consumer staplesstocks the weakest, off 1.1 percent. Dow componentCoca-Cola was one of the sector's worst performers,losing 1.4 percent.

The federal government, except for essential services, cameto a halt on Tuesday after the Senate blocked aRepublican-backed bill from the House of Representatives thatwould fund government agencies if the implementation ofPresident Barack Obama's healthcare law was delayed.

Despite a market bounce back on Tuesday, the politicalwrangling in Washington has raised investor concerns that theshutdown could be prolonged and sap Americans' confidence aswell as hurt economic growth.

"Yesterday, I think the market was just relieved that thegovernment shut down yet the sun still came up," said ErikDavidson, deputy chief investment officer for Wells FargoPrivate Bank in San Francisco. "The second morning we're nowrealizing the dysfunction in (Washington,) D.C. is going to becontinuing for a while."

Payrolls processor ADP said U.S. private employers added166,000 jobs in September, below expectations for 180,000 jobs.Investors were looking to this report for more guidance becauseFriday's broader, government payrolls report will be delayed ifno deal on the budget is reached by then.

The Dow Jones industrial average was down 93.63points, or 0.62 percent, at 15,098.07. The Standard & Poor's 500Index was down 7.84 points, or 0.46 percent, at 1,687.16.The Nasdaq Composite Index was down 12.38 points, or0.32 percent, at 3,805.61.

Monsanto Co reported a fourth-quarter loss that waswider than expected, and offered a lower outlook for 2014 evenas it said it was positioned for strong growth next year. Sharesfell 2.7 percent to $102.21.

Despite the recent declines, buyers have come in as the S&Papproached its 50-day moving average of 1,679.78. The movingaverage represents a measure of the near-term trend in themarket and often investors will buy in clusters at such levels.

Market participants are watching the situation for anindication of how an impending debate on the debt ceiling mightplay out. Strategists are starting to see a greater likelihoodthat the budget resolution becomes intertwined with the debtlimit issue. Without raising the debt ceiling, an unprecedenteddebt default by the United States could result, which would roilmarkets.

"More than likely the budget resolution issues are going tobleed over into the debt ceiling issues," Davidson said.

The shutdown's impact on economic growth and marketvolatility will likely increase the longer it continues.

Equity volatility has been on the rise, with the CBOEVolatility index gaining more than 25 percent over thepast two weeks. On Wednesday the VIX was up 5 percent to 16.25,still considered a low level.

Wall Street has managed to avoid steep declines during U.S.government shutdowns in the past. During a shutdown from late1995 to early 1996, the S&P 500 added 0.1 percent. During theNov. 13 to Nov. 19, 1995, shutdown, the benchmark index rose 1.3percent.

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