Top 3 Reasons Markets Were Down on More Debt Ceiling Fears
Markets closed down on Wall Street today: Dow -1.58%, S&P -2.02%, Nasdaq -2.65%, Oil -2.26%, Gold -0.22%.
Today’s markets were down because:
1) Debt ceiling. Probably the two dirtiest words in the American vocabulary today. President Obama and members of Congress have been working for months on a budget deal that both the Republican-led House and the Democrat-led Senate can agree upon, to no avail. And neither side would agree to raise the debt (NYSE:TLT) ceiling until a deficit-reduction plan is in place. Unfortunately, every bill proposed so far has been shot down, and Republicans are hurriedly working on another that will surely be shot down as well, by members of both the right and left. Democrat and Senate Majority Leader Harry Reid’s plan has a chance, with a significant amount of bipartisan support, but we haven’t seen it yet, and it’s questionable whether the plan will make it through a House vote. Oh yeah, and did I mention that the U.S. credit rating is likely to be cut even if a bill is passed in time to raise the debt ceiling? Apparently Reid’s and Boehner’s plans won’t cut enough to make ratings services happy.
2) Weak economic data. The Fed released their Beige Book survey today showing that the economic recovery has severely slowed, only compounding the depressing effect of news that durable goods orders fell 2.1% in June, which had Dow manufacturers like 3M (NYSE:MMM), United Technologies (NYSE:UTX), General Electric (NYSE:GE), and Caterpillar (NYSE:CAT) all trading in the red today. According to the Fed’s report, consumer spending stagnated with higher fuel prices taking a bite out of disposable income. The report also predicted little improvement in jobless figures in the second half of the year.
3) Earnings. Fortunately not all investors are taking their cues from the government. With earnings report season in full swing, a few companies have seen shares skyrocket in the last week on better-than-expected earnings reports. Just a few of the stocks preventing the markets from completely bottoming out are Boeing (NYSE:BA) and Amazon (NASDAQ:AMZN). Dunkin Brands (NASDAQ:DNKN) also had a bright IPO today.