Stocks Plunge After Debt Ceiling Deal
Investors still see signs of economic weakness
Update: The news out of Wall Street keeps getting worse. The selloff before the close of the market today left the Dow Jones Industrial Average down 265 points and the S&P 500 in negative territory for the year, according to The Wall Street Journal and CNN Money (all three indexes fell more than two percent). The Journal notes that the market is experiencing "its longest losing streak in nearly three years" while CNN Money adds that bond yields also dropped to a nine-month low on Tuesday. "Now that we have solved the debt ceiling issue the market has moved onto the other data, which has taken a significant turn for the worse," an analyst tells CNN.
News reports this afternoon suggest that the U.S. Senate has just steered the country away from a potential default in the nick of time by voting to raise the government's debt ceiling and cut trillions of dollars from its spending. Good news, right? The stock market appears to think otherwise. Minutes after news of the vote broke, The New York Times notes, Wall Street's three main indexes--the S&P 500, the Dow Jones industrial average, and the Nasdaq--were all down more than one percent.
Wall Street, the Times explains, is concerned about whether the debt deal--with its steep spending cuts--will hamper growth and whether the economy can overcome other challenges, like weak consumer spending. New data released today showed that personal spending unexpectedly fell 0.2 percent in June--the first time it has decreased since September 2009--while incomes hardly budged. Reuters adds that investors are also worried about a possible downgrade of America's triple-A credit rating in spite of the debt deal, though Fitch Rating stated shortly after the Senate vote that the risk of a U.S. default is now "extremely low."