Markets Crater as Super Committee Poised for Failure

Joel Anderson |

GILD, VRUS, NBL, HAL, MS, C, super committee, spending cuts, automatic cuts, panel, compromise, debt deal, failure, congress, tax cuts, revenue increases,News that the Congressional Super Committee is poised to fail to meet their Wednesday deadline sent markets into free-fall as the Dow Jones Industrial Average dropped over 2.5 percent, NASDAQ and the S&P 500 both lost over 2.3 percent. Created during the debate over the debt ceiling this summer and tasked with finding a compromise that would avoid automatic cuts to defense and discretionary spending, the Joint Select Committee on Deficit Reduction appears to have failed to meet their goal of finding a consensus.

Failure to Communicate

Aides from congressman on both sides of the aisle speaking under the condition of anonymity Monday said that the panel would most likely be announcing that it was going to fail to reach Wednesday's deadline to avoid triggering the automatic cuts. The debates that doomed the so-called Super Committee were, fittingly, the same as those debates that the committee emerged from on Aug. 1, with Republicans standing firmly against raising taxes while Democrats insisted on revenue increases to offset any cuts to federal entitlement programs. The two sides appear to have ultimately failed to find an acceptable compromise despite the looming automatic cuts that should prove painful to both parties.

Uncertainty About Future Leads to Market Volatility

The pending failure of the Super Committee, paired with the continuing debt crisis in Europe, left investors feeling skittish Monday and resulted in the massive sell-off that pushed down all the major indices. Prices for oil and gold were sharply down, while the markets as a whole spared relatively few victims. Banks Morgan Stanley (MS) and Citigroup, Inc. (C) were both down, with Citigroup dropping over 5 percent while Morgan Stanley's losses exceeded 6.5 percent. Several major oil and gas companies were also hit hard, with Range Resources Corporation (RRC) dropped just over 5 percent while Haliburton (HAL) and Noble Energy (NBL) both lost around 4.5 percent.

One company's stock managed to move against the market downturn as Pharmasset, Inc. (VRUS) spiked nearly 85 percent on news that it was being bought by Gilead Sciences, Inc. (GILD) for $11 billion, or $137 per share. Gilead's shares, meanwhile, were down just over 10 percent on news that the company would be paying an 89 percent premium for shares of Pharmasset.

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Companies

Symbol Name Price Change % Volume
C Citigroup Inc. 46.37 0.48 1.05 16,165,734
ELLI Ellie Mae Inc. 101.21 2.49 2.52 536,410
GILD Gilead Sciences Inc. 79.25 -1.37 -1.70 13,214,277
HAL Halliburton Company 40.95 -0.43 -1.04 11,842,888
MS Morgan Stanley 31.35 0.32 1.03 9,753,462
NBL Noble Energy Inc. 33.19 -0.43 -1.28 3,262,157

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