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. So what's causing gold to rally and the market to suffer its "longest losing streak in nearly three years"? Comments from analysts speaking to a range of international news wires are striking a similar chord: It's just an adjustment to the reality that the U.S. economic recovery is, and continues to be, sluggish:
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"
Tom Donino, co-head of trading at First New York Securities, speaking to The Wall Street Journal:
"The market is in corrective mode. There's also a lot of fear going into the unemployment report."
Martin Feldstein, Harvard University economics professor speaking with Bloomberg:
Feldstein said he sees a 50 percent chance that the U.S. will relapse into another recession. “Nothing has given us much growth."
This article is from the archive of our partner The Wire.