Market Reacts to Debt Ceiling Increase

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The stock market reacted negatively to news that Obama signed the compromise bill the debt ceiling increase bill today. The Dow Jones Industrial Average plunged more than 265 points to close below 12,000 while all three major stock indexes fell as investors reacted to more signs of weakness in the U.S. economy and poor earnings from several big companies.
All 30 stocks in the Dow lost ground. The S&P index has fallen for seven straight days, its longest string of losses since the middle of the financial crisis in October 2008. It is down nearly 7% since reaching a high for the year of 1,363 on April 29. The Dow has fallen for eight straight days, losing a total of 730 points, or nearly 6%. The broader stock market is on pace for its longest losing streak in two years and eighth losing session in a row.
“The market is starting to wonder where the growth is going to come from,” said Nick Kalivas, a vice president of financial research at MF Global. “It hasn’t hit the panic button yet, but that’s where we’re drifting.”
At the same time, Moody’s Investors Service said the U.S. credit rating may be downgraded for the first time on concern that fiscal discipline may erode, further debt reduction measures won’t be adopted and the economy may weaken.
The U.S., rated triple-A since 1917, was placed on negative outlook, Moody’s said in a statement today as it confirmed the rating after Obama signed into law a plan to lift the nation’s borrowing limit and cut spending.
JPMorgan Chase & Co. estimated that a downgrade of the United States’ credit rating would raise our borrowing costs by $100 billion a year. It could also hurt the rest of the U.S. economy by increasing the cost of mortgages, auto loans and other types of lending tied to the interest rates paid on Treasuries.
~Eowyn & Steve

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0 responses to “Market Reacts to Debt Ceiling Increase

  1. And it just keeps getting better…

  2. All I have to say is “I’m not a happy camper,at all” I will remember this with a vengence. That is how I am. When elections come,look-out. I am looking forward to an avalanche. And I mean that.

  3. Am I The Only One?

    Moody’s Investers Service said the U.S. Credit Rating May be downgraded for the First Time on the concern that Fiscal Discipline May Erode?
    Are You Kidding Me?

  4. But, golly, I thought more debt was an “investment”…

  5. “Analysis: After the Debt Deal: 5 Money Moves to Make Now,” by Linda Stern, Reuters via Yahoo! News, 2 Aug 2011


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