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Stocks tumble as "super committee" signals failure

November 21, 2011 |  8:33 am

Wall sign -- stan honda afp getty images
Stock prices are tumbling around the world as investors reacted to the apparent failure of the congressional "super committee" tasked with cutting the federal budget deficit.

Two hours into the U.S. trading day, the Dow Jones industrial average was at a five-week low of 11,491.04, down 305.12 points, or  2.6%. The broader Standard & Poor's 500 index was down 2.3% on the heels of its worst week in two months.

The "super committee" is expected to announce later Monday that it failed to come up with $1.2 trillion in cuts to the deficit. Committee members are reportedly still negotiating, but if those last-minute talks prove fruitless, the lack of a deal will trigger automatic cuts to domestic programs as well as defense spending.

For the financial markets, a failure by the committee would underscore an inability of leaders in Washington to act decisively.

In Europe, a number of stock markets sank more than 3% on the U.S. political gridlock as well as a warning by Moody's that it may downgrade French government bonds.

Also depressing share prices around the world were pessimistic comments by German and Chinese officials about their economies.

RELATED:

'Super committee' is all but admitting defeat

Corporate power grows stronger as government wanes

— Nathaniel Popper

twitter.com/nathanielpopper

Photo: An intersection on Wall Street. Credit: Stan Honda / Getty Images

 

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