Wall Street ends worst week in year on debt stalemate
1 of 2. The Dow Jones industrial average dropped 96.87 points, or 0.79 percent, to 12,143.24.
Credit: Reuters/Graphic
NEW YORK |
NEW YORK (Reuters) - Stocks ended the worst week in a year as time runs out on Washington to reach agreement before the government loses its ability to borrow money.
The S&P 500 fell every day this week and was down 3.9 percent for the week as legislators failed to work out an agreement to raise the federal borrowing limit, which expires on Tuesday. Investors also worry about the likelihood of a U.S. credit downgrade.
The CBOE Market Volatility Index .VIX, a gauge of investor fear, jumped as much as 9 percent to its highest level since mid-March before paring its rise.
Natalie Trunow, chief investment officer of equities at Calvert Investment Management in Bethesda, Maryland, said investors are taking a more defensive stance, possibly moving more into cash.
"It's frustrating for investors and for U.S. citizens to see this unfold in the way it has been," she said.
"From an overall asset allocation standpoint, in an environment like this, you get bigger moves into cash and safe havens."
The Dow Jones industrial average .DJI was down 96.87 points, or 0.79 percent, at 12,143.24. The Standard & Poor's 500 Index .SPX was down 8.39 points, or 0.65 percent, at 1,292.28. The Nasdaq Composite Index .IXIC was down 9.87 points, or 0.36 percent, at 2,756.38.
U.S. President Barack Obama told Republicans and Democrats to find a way "out of this mess." The United States will be unable to borrow money to pay its bills if Congress does not raise the debt limit by August 2.
A second attempt for a vote in the House of Representatives is expected after the close of trading on Friday after a bill was modified to try to win over more conservative lawmakers. The measure has little chance of passing in the Senate, however.
At least one credit rating agency has said it is likely to lower the United States' prized tripe-A rating if the cuts in Washington don't go far enough.
"Will the deal be enough to satisfy the credit rating agencies is really what's at stake here," Trunow said, whose firm manages about $14.8 billion.
The S&P utility index .GSPU is down 2.1 percent for the week, while the Dow is down 4.2 percent and the Nasdaq is down 3.6 percent for the week.
Major indexes also posted losses for the month: the Dow and S&P 500 each lost 2.2 percent while the Nasdaq fell 0.6 percent.
The S&P 500 briefly fell below its 200-day moving average, seen as key support, and bounced back from its worst levels of the day.
Weak economic data also weighed on equities. The U.S. economy stumbled badly in the first half of this year and came dangerously close to contracting in the January-March period.
Among declining stocks, Chevron Corp (CVX.N), the second-largest U.S. oil company, fell 1 percent to $104.02 despite reporting a 43 percent jump in quarterly profit that beat estimates.
Energy led declines on the Dow on Friday, but the industrial sector was among the hardest hit for the week. The S&P industrial sector .GSPI lost 6.1 percent this week, following disappointing results from companies including Illinois Tool Works (ITW.N).
"The industrial sector appears to be pricing in lower earnings ahead," said Chris Burba, a short-term market technician at Standard & Poor's in New York.
Some 8.58 billion shares changed hands on the New York Stock Exchange, NYSE Amex and Nasdaq, above the daily average of 7.48 billion.
Declines outweighed advances on the NYSE by about 2 to 1, while on Nasdaq losers outpaced winners by about 7 to 5.
(Reporting by Caroline Valetkevitch; Editing by Kenneth Barry)
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The Republicons come to power promising that their *TOP* priority is to defeat Obama. Now, true to their word, all they’ve done is try to scuttle the economy because they think that’s a sure-fire way to win in 2012 — because the Republicons think Americans are dumb enough to blame Obama for what the Cons are doing.
Why is anyone surprised that the economy is going down the toilet?
Instead of doing *their* freaking jobs, the Cons have been busy firing teachers, cops, fire fighters and anybody else that works for the “government.” They’re busy canning anything that might stimulate the economy, including public works projects like transportation. In their spare time they’ve taken a jab or two at women’s rights/health while always on the “hunt” for any environmental regulations (the sort that protect public health) that they can torpedo.
The Cons haven’t introduced a *single* jobs bill because they don’t *want* jobs. Jobs means economic recovery and economic recovery means they will have a tougher time beating Obama in 2012. So the Cons are basically screwing *all* of us in an effort to improve their odds in the next election.
The debt “crisis” is actually a Republicon crisis — an engineered mess courtesy of the TeaPublicans and their over-the-top anti-government ideology. This is what happens when propaganda outlets like Faux news manage to capture the hearts and minds of America’s couch potatoes and convince them that Obama is a “Muslim” and a “Socialist.”
The mystery is why anybody with any fiscal sense would support these loony tunes, and why (after > 30 years) anyone still thinks Reaganomics (AKA voodoo economics) has any merit left.
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