USA: Wall Street tumbles on worries over heavy debt both in the United States and Europe
Record ID:
187108
USA: Wall Street tumbles on worries over heavy debt both in the United States and Europe
- Title: USA: Wall Street tumbles on worries over heavy debt both in the United States and Europe
- Date: 22nd November 2011
- Summary: NEW YORK, NEW YORK, UNITED STATES (NOVEMBER 21, 2011) (REUTERS) (SOUNDBITE) (English) SAM STOVALL, CHIEF EQUITY STRATEGIST, S&P CAPITAL IQ, SAYING "I think that what's being worried about on Wall Street is not necessarily that the debt would be cut again, but rather that the other ratings agencies would now fall in line and that all would have a less than stellar rating for the U.S. government. I think it's also a continuation of Europe, that we all know that the worst case scenario could come if no agreement has been established and it seems to be that the leaders are not able to come to some sort of agreement."
- Embargoed: 7th December 2011 12:00
- Keywords:
- Location: Usa, Usa
- Country: USA
- Topics: Business,Economy
- Reuters ID: LVA2TBRCKVQ1ROQN7AAO9OFGTG8K
- Story Text: Stocks fell for a fourth session on Monday (November 21), as the lack of progress in dealing with heavy debt both in the United States and Europe further sapped investor confidence in equities.
Risky assets like commodities also fell, sparking a selloff in shares of industrials and energy companies. Volume was lower than average, with investors more inclined to sit on the sidelines amid the uncertainty.
"I think it's really just a crisis of confidence as it relates to our political leaders and their seemingly inability to pass the cuts that are needed to do," said Sam Stovall, Chief Equity Strategist at S&P Capital IQ.
The Dow Jones industrial average was down 248.85 points, or 2.11 percent, at 11,547.31. The Standard & Poor's 500 Index was down 22.66 points, or 1.86 percent, at 1,192.99. The Nasdaq Composite Index was down 49.36 points, or 1.92 percent, at 2,523.14.
A special U.S. congressional committee was expected to concede failure to reach a deal after three months of talks to slash the deficit.
There are concerns the stalemate will make it more difficult to pass extensions of stimulative measures like payroll tax cuts, which could hurt the U.S. economy. In addition, investors are worried that the committee's inability to come to an agreement could result in another downgrade of the U.S. credit rating, though so far the major ratings agencies have not commented.
"I think that what's being worried about on Wall Street is not necessarily that the debt would be cut again, but rather that the other ratings agencies would now fall in line and that all would have a less than stellar rating for the U.S. government," said Stovall.
He added, "I think it's also a continuation of Europe, that we all know that the worst case scenario could come if no agreement has been established and it seems to be that the leaders are not able to come to some sort of agreement."
Moody's Investors Service said a recent rise in interest rates on French government debt and weaker economic growth prospects could be negative for France's credit rating.
Blue chips, which have been outperforming smaller cap stocks, fell the most. The Dow was off 0.3 percent for the year. The S&P and the Nasdaq have fallen about five percent.
The S&P quickly fell through the 1,200 level seen as the next level of support. After that support was seen at 1,187, representing the 61.8 percent retracement of the 2011 high to low slide.
Among blue-chip stocks, Bank of America fell five percent to $5.49 (USD). On the Nasdaq, Amazon.com Inc shares lost four percent to $189.25.
In Europe, the FTSEurofirst 300 index fell to its lowest close in nearly seven weeks. Along with the new concerns about France, Spain's bond yields rose despite a clear-cut victory for austerity-committed conservatives in Sunday's election. There were few details on Prime Minister-elect Mariano Rajoy's plans.
About 7.6 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below the current daily average of eight billion shares. - Copyright Holder: REUTERS
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