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Stocks pile on losses amid worries on economy

AdamT said:
One from your own camp: Market Reacts to Debt Ceiling Increase | Fellowship of the Minds

"“Three main sources of uncertainty have weighed on risky assets in recent weeks: the global growth slowdown, the fiscal crisis in the euro zone and the discussions about the U.S. debt ceiling,” Joost van Leenders, a strategist at BNP Paribas Investment Partners in Amsterdam, who helps oversee about $780 billion, wrote in a report. “This last issue has been solved for now, but the other two came back with a vengeance.”

"Investors nervous about the prospect of a default by the U.S. government pulled money out of all forms of mutual funds, from money-market funds to those that invest in stocks.

U.S. money-market funds experienced $103 billion in redemptions the week ended Aug. 2, the most in one week since the bankruptcy of Lehman Brothers Holdings Inc. in September 2008, according to iMoneyNet, a fund research firm in Westborough, Massachusetts.

Mutual funds that invest in stocks and bonds had net redemptions of $10.4 billion in the week ended July 27, according to an e-mailed statement from the Investment Company Institute, a Washington-based trade group. It was the biggest withdrawal since the week ended May 26, 2010, when investors pulled $17.4 billion, ICI data show."

"Wall Street Journal--

Today’s markets were down because:

1) Debt ceiling. Every day I have to include the debt ceiling as one of the reasons the markets were down, a little piece of me dies. Four days until the Treasury’s deadline and Congress seems to have reached a stalemate. Boehner keeps pushing forward with his bill, and finally has enough votes in the House for it to pass, only to get voted down soon as it reaches the Senate, where Democrats and Republicans alike have vowed they will block it. Senate Majority Leader Harry Reid is working on a budget plan that has wider support in the Senate, but it has yet to be put to a vote, until which point there’s no knowing which way it will go, especially in the Republican-led House. So in the meantime, we wait and listen to China (NYSE:FXI) complain about the US.


2) GDP. If yesterday’s positive economic news wasn’t enough to counteract the depressing effect of the looming debt ceiling, today’s bad economic news sure isn’t going to help matters. Stocks took a huge dip this morning right out of the gate after the Commerce Department reported GDP grew at an annual rate of 1.3% during the second quarter, well below projections of 1.8% growth. While data like durable goods orders and consumer spending give us an idea of how the economy is progressing, GDP covers the whole kit and kaboodle, and the most recent figures are not good.

3) Treasuries. While short-term Treasuries saw a moderate selling-off on Friday, as would be expected, the price on the benchmark 10-year note (NYSE:TLT) rose, pushing the yield down from 2.91% to 2.78%, the biggest one-day drop since December 2010. Longer-term investors tend to focus more on the economy than more immediate issues like those plaguing Washington at the moment, so the fact that the price of long-term notes is up shows that investors have a positive economic outlook."

"The nonpartisan Economic Policy Institute reports that the debt ceiling deal will reduce GDP by 0.3 percent in 2012. Not good considering current growth of around 1, or 1.5 percent at best. Plus, the real cuts don't kick in until 2013. That means we'll be hitting the serious cuts while teetering on increasingly unstable footing. But that's not the grim news. The EPI is calculating that 1.8 million jobs will be killed in 2012 due to the big debt deal."
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The WSJ article is from prior to the compromise???
 
tessaesque said:
Anybody else irritated by the phrasing in the title? "Markets pile on losses"...If something is diminishing how is it also piling on?
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Sort of like jumbo shrimp.
 
tessaesque said:
The WSJ article is from prior to the compromise???
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Yes, as stated, the markets have been falling as a result of the uncertainty over the deal, and now that this horrible deal has been cut, they're falling (in part) as a result of the deal.

Note: I'm NOT saying that this is the only factor, or even the biggest factor. I agree that the biggest factor in recent days has been increased concern over the Euro zone. A close second is concern over the US economy and that has been serioudly impacted by the debt ceiling fiasco.
 
The "markets" are not the economy. The "markets" can fall while the economy improves. As I note, remove the additional money in the commodity markets and the economy improves. Yes, Wall Street suffers for a bit until the economy actually improves and well, Timmy and Bernie can't allow that.

The markets are NOT a good barometer for how the economy is doing especially when the government is manipulating it.
 
AdamT said:
Yes, as stated, the markets have been falling as a result of the uncertainty over the deal, and now that this horrible deal has been cut, they're falling (in part) as a result of the deal.

Note: I'm NOT saying that this is the only factor, or even the biggest factor. I agree that the biggest factor in recent days has been increased concern over the Euro zone. A close second is concern over the US economy and that has been serioudly impacted by the debt ceiling fiasco.
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Nope.........
NEW YORK (CNNMoney) -- U.S. stocks plunged on Tuesday as fears about a weak U.S. economy were enflamed after investors got another disappointing economic report - this time on consumer spending.

The selloff was so broad and so deep it pushed the S&P 500 into negative territory for the year and bond yields to their lowest levels in nine months.

"Now that we have solved the debt ceiling issue the market has moved onto the other data, which has taken a significant turn for the worse," said Ryan Detrick, senior technical strategist with Schaeffer's Investment Research.
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Market Report - Aug. 2, 2011 - CNNMoney
 
Gill said:
Nope.........

Market Report - Aug. 2, 2011 - CNNMoney
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Yes, that's right. Today's major drop was propelled in large part over concern about the U.S. economy. Do you think that analysts failed to consider the fact that instead of providing additional stimulus, we will instead be cutting spending and thus suppressing employment and GDP? Get real.

[EDIT: the Dow is now down almost 400 points. All a reaction to better-than-expected jobs report?]
 
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AdamT said:
Yes, that's right. Today's major drop was propelled in large part over concern about the U.S. economy. Do you think that analysts failed to consider the fact that instead of providing additional stimulus, we will instead be cutting spending and thus suppressing employment and GDP? Get real.

[EDIT: the Dow is now down almost 400 points. All a reaction to better-than-expected jobs report?]
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...we don't have the money to do another stimulus. We've got $14 trillion in debt, we're borrowing over GDP, and half of everything we spend is via borrowing. We cannot afford another $2 trillion or more in money that didn't have much affect the first time it was used.
 
tessaesque said:
...we don't have the money to do another stimulus. We've got $14 trillion in debt, we're borrowing over GDP, and half of everything we spend is via borrowing. We cannot afford another $2 trillion or more in money that didn't have much affect the first time it was used.
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We certainly can borrow more money to do another stimulus. Treasury yields are ridiculously low because there is a huge demand for U.S. debt. Borrow more now -- cut more later. It isn't that complicated.
 
As it stands now, the panic in the markets make zero sense... oil AND gold are down considerably last I looked as well as the markets.. and all that because of a made up problem with Italy? I smell a rat.. someone is successfully influencing the markets in a negative way... and as they say... follow the money... who ever made a bundle the last few weeks... there you have your problem.
 
NEW YORK (CNNMoney) -- U.S. stocks plunged on Tuesday as fears about a weak U.S. economy were enflamed after investors got another disappointing economic report - this time on consumer spending.

So for those who say that we have taken the correct route to righting the economy, how has creating inflation improved consumer spending?

Why did we create inflation? To make sure that Wall Street was profitable and to negate some of our massive debt. How is that working out? How is creating even more debt going to solve any of this?
 
AdamT said:
We certainly can borrow more money to do another stimulus. Treasury yields are ridiculously low because there is a huge demand for U.S. debt. Borrow more now -- cut more later. It isn't that complicated.
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Do you not understand how bad off we are because of borrowing? We already borrow 50% of what we spend. We are borrowing OVER GDP. Borrowing even more would be like taking a 4th mortgage out on your house when you're not paying the first 3 down.
 
PeteEU said:
As it stands now, the panic in the markets make zero sense... oil AND gold are down considerably last I looked as well as the markets..
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Oil quit it's climb after the government ended QE2. A welcomed relief for the people on the street.
 
1Perry said:
NEW YORK (CNNMoney) -- U.S. stocks plunged on Tuesday as fears about a weak U.S. economy were enflamed after investors got another disappointing economic report - this time on consumer spending.

So for those who say that we have taken the correct route to righting the economy, how has creating inflation improved consumer spending?

Why did we create inflation? To make sure that Wall Street was profitable and to negate some of our massive debt. How is that working out? How is creating even more debt going to solve any of this?
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You do realize that inflation is extremely low by historical standards, right?
 
tessaesque said:
Do you not understand how bad off we are because of borrowing? We already borrow 50% of what we spend. We are borrowing OVER GDP. Borrowing even more would be like taking a 4th mortgage out on your house when you're not paying the first 3 down.
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Yes, I do realize that. But you do not improve the debt situation by letting the country fall back into recession. That only make the situation worse in the short and long term.
 
AdamT said:
You do realize that inflation is extremely low by historical standards, right?
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Inflation is extremely low based upon current standards. Based upon historical standards it was far higher. I'll have to find the link later but I believe the numbers at it's peak recently inflation measured the same way we measured it in 1978 was around 10%.

On top of that one has to take into consideration the depressed housing market has had on the inflation numbers.
 
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Ockham said:
Got new for you - Europe is driving this. We go down, you go down.
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Very true. The people cheering our demise will see the results in their own backyard soon enough.

tessaesque said:
Anybody else irritated by the phrasing in the title? "Markets pile on losses"...If something is diminishing how is it also piling on?
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The media loves word games.

1Perry said:
The "markets" are not the economy. The "markets" can fall while the economy improves. As I note, remove the additional money in the commodity markets and the economy improves. Yes, Wall Street suffers for a bit until the economy actually improves and well, Timmy and Bernie can't allow that.

The markets are NOT a good barometer for how the economy is doing especially when the government is manipulating it.
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good point.

tessaesque said:
...we don't have the money to do another stimulus. We've got $14 trillion in debt, we're borrowing over GDP, and half of everything we spend is via borrowing. We cannot afford another $2 trillion or more in money that didn't have much affect the first time it was used.
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Too bad we can't get that $16 trillion back the fed loaned to foreign banks and corporations.

1Perry said:
Inflation is extremely low based upon current standards. Based upon historical standards it was far higher. I'll have to find the link later but I believe the numbers at it's peak recently inflation measured the same way we measured it in 1978 was around 10%.
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Except that those numbers are also manipulated by the government. I'd imagine the actual numbers are much more alarming. I guess we'll find out in a few years when the government goes back and changes its original figures just as it did with the unemployment rates.
 
evanescence said:
Except that those numbers are also manipulated by the government. I'd imagine the actual numbers are much more alarming. I guess we'll find out in a few years when the government goes back and changes its original figures just as it did with the unemployment rates.
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Unfortunately there is no going back. Administrations have regularly changed the formula to make things look better than what they actually are. (administrations from both parties, I'm not accusing Obama of fudging the numbers. They were already fudged)
 
Dow approaching a 500 point loss, and that is actually pretty good compared to the other indices.
 
PeteEU said:
As it stands now, the panic in the markets make zero sense... oil AND gold are down considerably last I looked as well as the markets.. and all that because of a made up problem with Italy? I smell a rat.. someone is successfully influencing the markets in a negative way... and as they say... follow the money... who ever made a bundle the last few weeks... there you have your problem.
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Sounds like Soros at work again.
 
DING DING DING!! The Dow closes down 512 points (-4.31%). The New York Stock Exchange lost 5.4%.
 
teamosil said:
At the moment, the DOW is down two hundred and some points for the day. That's not that odd. I'm finding 31 days in the past 2 years where the market moved more than 200 points in a day. About evenly split between down and up, although overall obviously the trend has been way up. Ups tend to come in lots of days with small gains more.
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lol.....see end of day.
 
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