Dow's fate will be decided by Capitol Hill

AFTER another round of Washington-induced volatility, the stock market's performance this week again hinges on negotiations to end the government shutdown.

If Republicans and Democrats send the roughly 800,000 furloughed government employees back to work, or there is some clear breakthrough in the negotiations, stocks will likely rally back toward the Dow Jones Industrial Average's recent high above 15,600. If the deadlock drags on for another week, however, the index could slide back toward 14,000.

All last week, both sides dug in their heels, and the Dow was stuck around 15,000. Leaks from President Barack Obama's administration suggested the White House is happy to stand by and watch the Republicans take the blame for what could be an economic catastrophe. Slips from the Republican Senate leadership suggested they believe they are "winning" the cold legislative war with their demands to renegotiate healthcare laws.