The stock market was whipsawed Tuesday as the on-again, off-again talk of a debt deal in Washington made investors wonder just how pessimistic they should be.
Stocks were flat or down all day, but the size of the losses waxed and waned depending on which politician was giving a press conference. The market closed with its first loss in a week, with the Dow Jones industrials down 133 points. Yields on short-term government debt rose sharply as investors worried about the possibility of a default.
Indexes were down only slightly early Tuesday, when Republican and Democratic leaders in the Senate reported that a deal over increasing the nation’s borrowing limit appeared to be getting closer. But after House Republicans came up with their own competing plan later in the day, and it was rejected by Democrats, stocks fell further.
The stakes are high and the deadline is getting nearer. Unless the borrowing limit is raised, the U.S. will bump up against a Thursday deadline after which it can no longer borrow money to pay its bills, which could lead to a default on government debt. That possibility has rattled markets all month.
After markets closed, Fitch Ratings said it might downgrade the government’s AAA bond rating. The agency said it sees a higher risk for default because of the uncertainty over whether Congress will raise the debt limit. Fitch said it will make a final decision by the end of March at the latest, depending on how long any agreement to raise the debt ceiling lasts.
It was clear that traders were hanging on every word out of Washington. The losses on the Dow shrank by about 40 points during a short press conference by House Speaker John Boehner shortly before noon Eastern.
Another reason for Wall Street’s pessimism is that any deal reached this week might simply set up another showdown a few months down the road.
The Dow Jones industrial average fell 133.25 points, or 0.9 percent, to 15,168.01. The Standard & Poor’s 500 index fell 12.08 points, or 0.7 percent, to 1,698.06. The Nasdaq composite fell 21.26 points, or 0.6 percent, to 3,794.01.
The losses were broad. All 10 industry groups in the S&P 500 fell and three stocks fell for every one that rose on the New York Stock Exchange.
Uri Landesman, president of Platinum Partners, a New York-based investment management group, said he thinks there will be a deal, but that investors are making a mistake to focus on it so heavily since the economy still has so many risks. Investors aren’t appreciating the risk of poor economic reports, slow profit growth and the possibility of flare-ups in conflicts with Iran and Syria, which could cause a spike in energy prices.
“There’s a lot more risk to the downside,” Landesman said. “I don’t think things are that robust out there.”
Among stocks making big moves:
— FedEx shareholders were happy about expanded stock buybacks. FedEx’s stock rose $4.71, or 4 percent, to $120.08.
— Charles Schwab rose $1.02, almost 5 percent, to $23.03 after the brokerage company said its quarter profit rose 19 percent as trading and interest revenue increased.
— Advertising company Omnicom Group reported adjusted results and revenue that were higher than analysts had expected. Its stock rose $1.01, almost 2 percent, to $64.96.
Parts of the bond market have started to show signs of stress.
The yield on the 10-year T-note rose to 2.73 percent from 2.69 percent on Friday. Bond trading was closed Monday for Columbus Day. Yields on three-month and six-month T-bills also rose.
The yield on the one-month T-bill nearly doubled in only a few hours, going from 0.18 percent early Tuesday to 0.34 percent by the afternoon. It’s considered to be the T-bill most likely to be affected by a federal government default. Money market funds owned by Fidelity and JPMorgan Chase & Co. have been selling off their one-month T-bill holdings to limit their exposure to the security.
The price of oil fell $1.20 to close at $101.21 as negotiations over Iran’s nuclear abilities began.
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This Week’s Celebrity Instagrams (11/26-12/2)
30 photos Launch gallery
1. Little Legend and Puddy 😍😍😍😍
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2. "You on point Phife?" "all the time,Tip". 💥 #bannedfromnormal
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3. Vegan! The Impossible burger at Crossroads
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4. Lawrence #BeforeandAfterEpisodes 1-4: 184lbs 13% body fatEpisode 8: 196lbs 8% body fat S/O @coachdaveboxing with the works outs and @kildareriordan with the nutrition
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5. Jus haaaanngin out
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6. Meanwhile back at home in Atlanta GA someone mad they not on the 🛳. 😳
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7. No limits... Photo cred: Chris Bridges @ludacris
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8. new new
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9. Apparently my 260lbs is too much for the actual vines in the Hawaiian jungles to hold me without breaking and me falling hundreds of feet. So for safety purposes, I'm forced to swing thru #Jumanjj on wires strong enough to hold 12 adult buffaloes and 1 adult Rock. #OnSet #Jumanji #IronicallyIEatBuffaloDailyForLunch #MoreManThanNatureKnowsWhatToDoWith
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10. hey ma! 🎎#wcw 💙
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11. Surprise visit to our factories!!! #GoodAmerican #USA
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13. Peachy Keen 🔥✨⚡️
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14. If this don't look thankful I don't know what does. Happy Thanksgiving to you and yours. #UltraBlessed #24kMagic #SweetPotatoFly
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15. Late nights @nbcmarlon with the writers... we in here!!!
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16. There goes my baaaaaaaaabbbbyyyyy #QueenKingMagic!!! We're up to something! Ira BIG!!! Stay out our buisness -
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17. You want to win every game you play but when you come home to these faces... who cares. #ILoveYouGirls best part of my day, everyday!
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18. Steady,steady..... full size jenga.. "I got this one "???? Or do I ?
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19. Cornrows kind of day 😉@dontaysavoy2 you convinced me and I love. ❤️️
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20. #BrotherlyLove #tbt
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22. #basel #TeamLOVE @kingcombs
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23. Just introduced a special screening of @directher 's groundbreaking (must see) documentary @13thfilm with my brother @themichaelealy | @unitedblackout #blackoutblackfriday
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24. Me & Vanessa Williams giving #DuckLips #Pose on the set of #DaytimeDivas @vh1 - Coming Soon to a tv near you. Lol. - My make up done by @makeupsurgeon
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25. This picture just makes me wanna praise the Lord, you hear me!!!!!! Yes Lord brotha #TEDDYCAMPBELL What a #man !!! You are everything right on this picture husband ......... #gorgeous #stylish #classy #strong #masculine #king #sexy #debonair #gentlemenstyle And that #bible in your hand just seals the deal for me (probably cause i know that, that is what helped you become just as amazing as you look😘). While my heart and mind experiences the goodness of God at #church on Sundays, my eyes experiences the goodness of Teddy😍. Amen somebody🙌🏽. "Bless the Lord oh my soul and all that is within me bless his holy name" #myman #myhusband #goodman #blackman #dapperman #godlyman #goodfather #mybestfriend
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26. Yesterday was my mama's 53rd birthday!!!!! Got to celebrate with her all day. If this is what I have to look forward to I can't wait. Looking like a soft bucket a cocoa butter. Yaaaaaaaaaas! 😍😍😍 love you mommy!
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27. "Shout out to @PureAtlanta for getting the family right"....I'm loving this jogger. 😍😍
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28. This pic warms my heart ❤️ #myLogiebeans and aunt aunt umba @itowandabraxton 😘
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29. You will always be my baby😜. #HappyBirthdayReginae #mybaby18
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30. GC "Gods Child" Red on Red SweatSuit available now at www.MonicaApparel.com ... Take Your Crown wherever you go!! I'm pictured in a Medium... Go to the site now for other options ... cc: @trukernell
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