Markets closed down on Wall Street today: Dow -0.44%, S&P -0.68%, Nasdaq -1.22%, Oil -2.15%, Gold +0.03%.
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Today’s markets were down because:
1) No QE3? While Bernanke seemed to hint at the possibility of a third round of quantitative easing when addressing Congress yesterday, now he’s backing off, saying that the issue is “more complex” than before QE2, and that the Fed is “not prepared at this point to take further action.”
2) Techs, Transports, and Cyclicals. While the Dow and S&P hovered close yesterday’s closing figures, the Nasdaq dropped off more than 1%, with transports down 1.3% and industrials like Alcoa (NYSE:AA), Dupont (NYSE:DD), and 3M (NYSE:MMM) some of the day’s worst performers. The cyclical and leading-edge sectors also did poorly today. S&P industrials were down 0.7%, as was the S&P’s tech sector. The S&P Small-Cap 600 was down 1.2%.
3) Downgrade watch. Wednesday evening, Moody’s (NYSE:MCO) put the U.S. on the watchlist for a possible credit rating downgrade, citing the “rising possibility” that Congress won’t reach a deal to raise the debt ceiling on time, triggering a selective default on government obligations. After American investors have watched European stocks and American stocks tank every time a relatively small Euro-Zone country gets downgraded by a ratings service, the possibility that government of the country with the world’s largest economy could be downgraded definitely has people scared. Hopefully after Obama’s meetings with congressional leaders today and tomorrow, we’ll be privy to some brighter news and see the markets rally like they did last week.