Debt Ceiling Raised, But Markets Still Depressed

By Eliza

Aug 2, 2011 5:00pm

ABC News’ Dan Arnall (@abcmoneyguy) reports:

After a multi-week fight in Congress over a potential default for the U.S. Treasury resolved with a last-minute increase in the nation’s debt ceiling, the stock market is turning to the dire economy the nation finds itself in.

Today’s more than 2% drop in the Dow marks the eighth straight day of selling – the longest run of consecutive negative days since the worst part of the financial crisis (10/10/08). In that eight day period, the Dow has dropped by more than 850 points (-6.7 percent).

The broader S&P 500 has lost 6.8 percent (-90.97 points) during the past seven trading days (its consecutive string of negative days). With the close at 1254 for the S&P all the gains for the year have been erased.

Traders were focused on a morning report which showed American consumers were spending less during June – the biggest one month drop since 2009. Add that to the bummer of a GDP report from Friday and you have a LOT of people talking about a double dip recession.

We also live in a world where there’s no appetite for more fiscal stimulus from Congress/The White House and probably even no more monetary stimulus from the Federal Reserve. That leaves not much standing between today’s slow growth and negative economic growth.

Lots of focus on Friday’s jobs numbers – economists betting we’ll see about 84,000 new jobs added in July. Beating that could change the market’s momentum. Missing the estimate could really put us into a tailspin.

FINAL NUMBERS:

Closing Level

Pnt. Chng.

Pct. Chng.

Dow

11,866.62

-265.87

-2.19%

Nasdaq

2,669.24

-75.37

-2.75%

S&P 500

1,254.05

-32.89

-2.56%

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