Why Did the Stock Market Tank After the Debt Deal?

Analysts Say Market Plunge Is Adjustment to New 'Economic Realities'

Google Finance

Brave new "economic realities"...

As the Dow Jones Industrial Average plunged 266 points and the Standard & Poor's 500-stock index sunk to a 2011 low Tuesday, financial journalists raced to find Wall Street analysts willing to explain the dramatic tumble, which comes amid positive news that the U.S. government would avert a default following President Obama's signage of a debt deal. Of course, the plunge also coincided with the gloomy news from across the pond in Europe where money markets began to freeze as the debt crisis in Italy and Spain escalated. It also coincided with a dreary Commerce Department report showing that consumer spending fell 0.2 percent in June, a first since mid-2009...

Uri Landesman, the president of Platinum Partners, speaking with The New York Times: [He] said that investors were discounting the debt deal and, with such poor economic data, starting to question the viability of corporate earnings for rest of the year. "Economic data has been a disaster," he said. "It's clunker after clunker. If the economy is desultory, how are the earnings going to excel?"

Hank Smith, chief investment officer at Haverford Trust Co, speaking to Bloomberg: "We have a stubbornly slow economy. The economy is stuck in a very slow growth mode, which means that it's more susceptible to any external shocks."

Fred Dickson, chief market strategist at The Davidson Cos., speaking to Reuters: "Investors have made the shift from Washington to what I'm calling economic realities"

Read the full story at The Atlantic Wire.

Presented by

The Atlantic Wire is your authoritative guide to the news and ideas that matter most right now.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Video

Confessions of Moms Around the World

A global look at the hardest and best job ever

Video

A Stop-Motion Tour of New York City

A filmmaker animated hundreds of still photographs to create this Big Apple flip book

Video

The Absurd Psychology of Restaurant Menus

Would people eat healthier if celery was called "cool celery?"

Video

This Japanese Inn Has Been Open for 1,300 Years

It's one of the oldest family businesses in the world.

More in Business

Just In