New York Magazine writes: Theory 1) Wall Street doesn't like the debt deal. The market didn't actually dip all that much when it appeared Congress might let the debt-ceiling deadline pass without taking action, but as soon as news of the specific terms of the deal hit, that's when the market started tanking. The worry is the U.S. is headed for the dreaded "double-dip" recession, since the debt deal reduces federal spending just when the economy needs cash pumped into it most.
Theory 2) This has been coming for a while, given the general slowdown of the world economy, and the massive uncertainty over what will happen with the European debt crisis. Maybe the debt deal and worry over the U.S. compounded things, but it didn't singlehandedly create or even trigger the problem.
Theory 3) Stocks are still overpriced relative to earnings, and today's drop was a dramatic step along the way toward an inevitable return to sea level. The S&P's stock-price/earnings ratio is still slightly above the average over the last 50 years, David Leonhardt points out, and expensive stocks are but "one more reason to be concerned about the economy."
Theory 4) The Smurfs are to blame. Ever since Papa Smurf rang the opening NYSE bell on July 29, the Dow Jones Index has lost more than 1,000 points. Where's Gargamel when you need him?
Read more at http://nymag.com/daily/intel/2011/08/the_stock_market_is_looking_re.html
No comments:
Post a Comment