Congressional leaders and the White House reached an agreement on a new budget plan that would raise the nation’s debt ceiling Sunday, but U.S. stocks are still trading lower today. While the bill still needs to be voted on today–and is being criticized by Democrats because it focuses almost completely on spending cuts with no tax increases–it was enough for some investors to remain optimistic. Stocks were opened higher today, but are now down over 1 percent in mid-day trading as the market still is generally uncertain of whether a resolution will come in time before tomorrow’s deadline. Compounding the issue is key economic data that shows the U.S. economy is slowing at a pretty alarming rate. Today, the Institute for Supply Management said that manufacturing activity in July fell to 50.9 percent from 55.3 percent in June. It is the lowest level in two years, and falling close to where the numbers were right after the recession. Healthcare stocks are taking a beating today as possible significant cuts to Medicare sparked a sell off in the sector. Some smaller hospital stocks lost as much as half their value. In commodities, oil prices sank to $94 a barrel as investors fear the slowdown in economic activity around the world will lower demand. Precious metals like gold and silver dipped in early trading but have since regained most of their losses.
Major U.S. Stock Indices
DJIA: 12,012.99 (-1.07 percent)
S&P 500: 1,276.10 (-1.25 percent)
NASDAQ: 2,719.27 (-1.35 percent)
Russell 2000: 788.11 (1.12 percent)
In other news:
- For every report about a possible new deal, there seems to be an equal amount of articles about how the economy is still in danger. In fact, the deficit deal may even force the S&P to downgrade the U.S.’s credit rating. [CNBC]
- Whether or not Congress passes the bill and staves off a default and/or credit rating cut, there’s one clear winner that came out during this entire debt ceiling debacle: The Tea Party. [Marketwatch]
- For those who think tech start-up IPOs are yesterday’s news, here are 13 more that could be making a debut in the near future. [Fortune]
- Netflix (NFLX) has been a darling for investors for the last few years now, but with more and more stiff competition entering the fray of movie streaming, the company is now going up against the likes of Google (GOOG), Amazon (AMZN) and CBS (CBS). [The Street]
- With so much at risk, why was the private sector so quiet during this entire debt ceiling debate? [Bloomberg]
Check back for more news.