Dow Drops 250 as Super Committee Goes Splat
NEW YORK (TheStreet) -- Stocks closed down sharply on Monday as political gridlock on U.S. deficit cuts raised a new set of concerns for Wall Street.
Losses were mitigated late in the session when Sen. Max Baucus (D., Mont.), chairman of the Senate Finance Committee, stoked hopes the congressional super committee would be able to reach a compromise but that possibility proved fleeting as the committee issued a statement after the close claiming an agreement was "not possible."
Skepticism that an agreement would be reached ruled the day, although ongoing European debt contagion fears also added to the market's edginess. The committee's failure now has investors worried about the potential for more damage to the U.S.'s credit rating or the confidence of consumers and businesses being shook at a time when the slow recovery in the U.S. economy remains fragile.
The Dow Jones Industrial Average dropped 249 points, or 2.1%, to finish at 11,547. Its session low was 11,454. The weakest blue-chip performers were Bank of America (BAC), Walt Disney Company (DIS)and Hewlett-Packard (HPQ).The S&P 500, dipping below 1200 for the first time since late October, lost 23 points, or 1.9%, to close at 1193. Technical analysts were looking for the S&P 500 to hold the 1180 level after breaking through several key technical levels in the prior week. Industrial and financial stocks led the index lower. The tech-heavy Nasdaq shed 49 points, or 1.9%, to settle at 2523.
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