Get ready for a wild ride in the markets on Wednesday, experts warn.
Fitch Ratings put US government debt on negative watch after the market’s close Tuesday — the first sign that Wednesday will likely be a volatile one.
The Dow Jones industrial average, which fell 133.25 points Tuesday when lawmakers continued to dither over a deal to reopen government and raise the debt ceiling, pointed toward a 130-point decline on Wednesday, based on the futures market.
“Although Fitch continues to believe that the debt ceiling will be raised soon, the political brinkmanship and reduced financing flexibility could increase the risk of a US default,” the agency said.
Market strategists have noted that the US has some wiggle room after Oct. 17 before it actually defaults, with the final deadline Nov. 1 — when Treasury-bond interest and Social Security payments are due.
“Investors want to see a deal done by Oct. 17,” said Jack Ablin, chief investment officer of BMO Private Bank.
He believes that has a less than 50 percent chance of happening, and suggested, “We’re going to see some investors just sell stocks first and ask questions later.”
Ablin and several other market strategists contacted by The Post said the Dow could slide by another 500 points Thursday, if lawmakers can’t agree on a deal by midnight Wednesday.
The S&P 500 could go down another 4.4 percent, to about 1635, said Steve East, an analyst with Height Analytics. It closed Tuesday at 1698, down 0.7 percent.
East said if a deal isn’t reached by Nov. 1, the S&P500 could fall by more than 500 points – about 32 percent.
“That would be Defcon 3, and there’s no guarantee it would stop there,” he warned.