Wall Street pummeled by default stalemate, poor earnings

09:43, July 28, 2011      

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Wall Street stocks suffered its worst day in two months Wednesday, hit by weak earnings, lackluster economic data and the lingering political stalemate in Washington talks as the deadline for a U.S. default looms.

The Dow Jones industrial average lost 198.75 points, or 1.59 percent, at 12,302.55. The Standard & Poor's 500 Index was down 27.05 points, or 2.03 percent, at 1,304.89, and had its worst daily percentage decline since June 1. The Nasdaq Composite Index was down 75.17 points, or 2.65 percent, at 2,764.79.

The debt ceiling debate has grabbed much of investors' attention this week as the August 2 deadline approaches, but it took a back seat for much of the day as the market reacted to earnings disappointments in industrial and technology sectors.

A late statement from White House that the government would be "running on fumes" if the debt ceiling isn't increased by the deadline added to selling.Besides a potential default on U.S. debt, the government could face a downgrade of its credit. The S&P 500 index has lost 3 percent this week amid acrimonious debate about raising the American debt ceiling.

"The market is beginning to show real concerns in terms of a default. I don't think it's going to happen ... but are we headed for a downgrade? That is becoming more of a possibility as each day goes by," said Peter Cardillo, chief market economist at Avalon Partners, in New York.

Volume increased as the selling extended, a sign of weak conviction among investors. Nearly 14 stocks fell for every one that rose on the NYSE.

Source: Agencies
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