The lack of meaningful of movement in Washington was not garnering much attention until the bond market went haywire with the pricing of a 1 month debt. The lack of demand from investors could have been caused by many factors but the fact that the 1 month rate on government debt shot to it's highest level since Lehman Brothers (and roughly 3 times the rate we've been paying) has got the market's attention.
The President scheduled a press conference to discuss the budget impasse shortly after this move in the bond market which sparked selling in stocks as well.
I'll try to offer more color later, but remember that this is one of the risks with the game being played in Washington. The cost of our borrowing could increase meaningfully if the buyers decide to stay home.