Congress made no progress yesterday on dealing with the nation's debt ceiling and budget plan as House Speak John Boehner canceled voting for his bill because a lack of support from Republicans. The move caused more confusion in an already stressed market. Adding to the pressure was data released by the Commerce Department showing the economy had slowed considerably in the first half of 2011, and came very close to contracting in the first period. In the three months from January to March, the U.S. economy only grew 0.4 percent, with the second quarter picking up to 1.3 percent. Economists had originally thought GDP expanded 1.9 percent in the first quarter. The new report shows that the nation's economy is much more fragile than originally thought and in danger of returning to a recession, especially if Congress fails to raise the U.S. debt ceiling in time to avoid a default or credit rating downgrade. With only a little more than a weekend left to work out a long-term plan, Congress is under the gun to get a deal done in time. Boehner's plan is currently on the shelf as supporters either have to find more backing or rewrite the bill. Meanwhile, Senate Majority Leader Harry Reid has been saying his bill is ready to be pushed forward. President Barack Obama stressed the urgency and the need for bipartisan compromise. Oil prices also took a hit, falling 2 percent as investors worry whether the slower GDP growth could affect demand. Precious metals like gold and silver edged slightly higher.
Major U.S. Stock Indices
DJIA: 12,180.32 (-0.49 percent)
S&P 500: 1,296.26 (-0.34 percent)
NASDAQ: 2,762.55 (-0.12 percent)
Russell 2000: 796.12 (-0.40 percent)
In other news:
- Unusual activity in REITs today brought back memories of the Flash Crash of last year and the term "fat-fingered trader." [Bloomberg]
- Here's a glowing piece on John Boehner and why his refusal to compromise with the economy on the line is actually a good thing. [WSJ]
- Why hasn't Congress raised the debt ceiling yet? Apparently because the market has had too much confidence in lawmakers to avert a default. [CNBC]
- Apple (AAPL) is taking over the world, one industry at a time. The company has overtaken Nokia as the world's top smartphone maker and Nintendo's dominance in handheld gaming devices could be next. [Barrons, WSJ]
Check back for more news.
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