NEW YORK (MarketWatch) — U.S. stocks were hammered Wednesday with no end in view to political sparring over raising the debt limit and economic data that only heightened uncertainty about the recovery.
“The debate in Washington is creating more and more uncertainty, and the longer it drags on is only going to enhance market anxieties and lead to more volatility,” said Mark Luschini, chief investment strategist at Janney Montgomery Scott. Read more on lawmakers’ latest plans to cut the deficit.
Extending losses into a fourth session, the Dow Jones Industrial Average DJIA -1.59% fell 198.75 points, or 1.6%, to 12,302.55. The rout is the worst for the blue-chip index since June 1.
The Standard & Poor’s 500 Index SPX -2.03% shed 27.05 points, or 2%, to 1,304.89, with technology and industrials the heaviest weights of the index’s 10 industry groups. All groups fell, “indicating investors are just hitting the sell button without distinguishing,” said Luschini.
The Nasdaq Composite Index COMP -2.65% fell 75.17 points, or 2.7%, to 2,764.79.
The selloff extended beyond stocks, to almost every major asset class except the U.S. dollar.
Treasury prices also fell after investors offered tepid demand as the government auctioned $35 billion in five-year notes, with yields on the benchmark 10-year Treasury note 10_YEAR +0.71% rising to 2.978%
Gold futures GC1Z +0.02% for December delivery fell $2 to end at $1,617.30 an ounce, retreating from a string of record closes for bullion, while crude-oil futures CL1U -0.23% slid $2.19 to $97.40 a barrel after government data showed a rise in inventory last week. Read more on gold futures and read more on oil futures.
The dollar index DXY 0.00% rose to 74.09 from 73.501, gaining ground as stocks sold off and as the euro slid.
For every stock that rose, more than nine fell on the New York Stock Exchange, where nearly 1.1 billion shares traded. Composite volume topped 4.6 billion.
Helping fuel worries about industrials firms, conglomerate Emerson Electric Co. EMR -0.99% warned on Wednesday of slowing economies in the U.S. and in Europe.
Investors did embrace the market debut of Dunkin’ Brands Group Inc. DNKN +47.32% , with shares of the initial public offering rising 53% to $28.97 a piece.
“News on the corporate profit front has been good, but the market is of the opinion that companies really have to surprise to the upside to get the benefit of the doubt,” Luschini said.
Wall Street’s nerves frayed as the deadlock over raising the debt limit showed few signs of abating in Washington, with a House vote on Speaker John Boehner’s plan to raise the debt ceiling and trim the deficit delayed at least a day.
Adding further fodder to the debate, the Congressional Budget Office said Senate Majority leader Harry Reid’s deficit-reduction plan would cut projected deficits by $2.2 trillion over 10 years, $500 billion less than the $2.7 trillion in future cuts estimated by the Nevada Democrat.
The CBO found a competing plan sponsored by Ohio Republican Boehner would cut the deficit by $850 billion over 10 years, $350 billion short of the $1.1 trillion he projected.
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