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Monday
Nov212011

Stocks Take Tumble as Supercommitee Stalls

Spencer Platt/Getty Images(NEW YORK) -- Stocks took a tumble on Monday following reports that the Congressional Joint Select Committee, or supercommittee, have failed to reach an agreement on spending cuts and tax increases to trim the deficit by the deadline of Nov. 23.

The Dow Jones Industrial Average dropped 290 points or over 2.4 percent to 11,511 around 12:05 p.m. ET and the Nasdaq was down 2.4 percent to 2,511.

In addition to the European debt crisis, investors are concerned that the failure to reach an agreement may lead to another credit downgrade for U.S. bonds and thus higher borrowing costs for the government.

Without a deficit reduction agreement, $1.2 trillion in "sequester caps," or automatic cuts, will be implemented. The cuts will affect a range of programs from Medicare and Medicaid to the Pentagon.

Copyright 2011 ABC News Radio

Friday
Aug192011

Stormy Seas for Stocks after Sour Economic News

A trader works on the floor of the New York Stock Exchange during morning trading on August 19, 2011 in New York City. The Dow began the day falling 97 points. Andrew Burton/Getty Images(NEW YORK) -- U.S. stocks went on another wild ride Friday amid growing worries about an economic slowdown in the U.S. and Europe.

The Dow Jones industrial average fell sharply at the open, recovered to the plus side, then slipped steadily lower by mid-day, falling 40 points to 10,969 at 12:30 p.m. In Europe, the major indexes were off 3 percent to 4 percent at mid-day, but recovered much of that ground at the close.

After Morgan Stanley cut its estimates for world economic growth Thursday, Citigroup weighed in, reducing its estimate for U.S. gross domestic product growth to 1.6 percent this year from 1.7 percent, and slashed its forecast for 2012 to 2.1 percent from 2.7 percent.

Britain's FTSE 100 closed down 1 percent, while Germany's DAX fell 2.1 percent. Gold hit another new record of $1,858 an ounce.

Market turmoil over the last two days has dashed any hopes of a quiet second half of August -- a normally quiet period when trading dries up until the U.S. returns from the Labor Day holiday in early September.

Financial markets have wrestled for several weeks with fears that a new recession in the U.S. is in the offing. Another round of soft economic data further spooked investors all round the world. A woeful manufacturing survey Thursday from the Federal Reserve Bank of Philadelphia renewed U.S. recession fears in particular.

The Dow Jones industrial average closed 424.7 points lower to 10,985.50 on Thursday. In Europe, the major indexes at closing had fallen sharply, with London's FTSE off 4.5 percent and the German DAX down 5.8 percent.

Back in the U.S., the Labor Department reported 408,000 initial unemployment claims were filed in the week that ended Aug. 13, up 9,000 from a revised 399,000 from the previous week.

The Federal Reserve of Philadelphia reported a decrease in factory activity in August.

The Consumer Price Index rose 0.5 percent in July, more than twice the expected 0.2 percent, leading to some fears of "stagflation," a combination of price inflation and stagnation in the economy.

Before these negative U.S. economic reports, bank stocks in the U.S. and in Europe were hit by a wave of selling after Sweden's financial regulator said lenders there should expect a worsening in Europe's debt crisis. That could lead to a freeze of lending between banks, cutting off loans to businesses.

Meanwhile, investment bank Morgan Stanley cut its global growth forecast for the year to 3.9 percent, down from a previous forecast of 4.2 percent. The bank cited an "insufficient" policy response to Europe's sovereign debt woes and the possibility of fiscal tightening that could make it harder for businesses to borrow.

Morgan Stanley, which also cut its China growth forecast for next year, wrote that the U.S. and Europe are "dangerously close to recession."

"Recent policy errors, especially Europe's slow and insufficient response to the sovereign crisis and the drama around lifting the U.S. debt ceiling, have weighed down on financial markets and eroded business and consumer confidence," London-based analyst Joachim Fels wrote in the report.  

Copyright 2011 ABC News Radio







ABC News Radio