Stocks started off on the wrong foot this morning as investors awaited smoke signals from Congress. The Dow dropped 122 points, while the S&P and Nasdaq fell 1.3% and 0.9%, respectively. The session is likely to be a volatile one, with the Senate’s expected bailout vote tonight seen as a major turning point. “Given the political capital invested by all sides, we think that ultimately a deal will be reached,” said one strategist.
Speculation that the Fed may issue an emergency rate cut heated up as Goldman Sachs said they’re expecting such a move. The ADP employment index also bore positive news, showing a smaller-than-expected decline in private-sector US jobs. Perhaps most encouragingly, overnight lending rates dropped, though they remained above official rates.