The bulls started Tuesday’s session playing catch-up once again after the market open lowered over the “lack of urgency” in Washington to get a debt-limit deal done. The hemming-and-hawing between the Democrats and Republicans has been a drag on the indexes as Wall Street expected a deal would get done over the weekend, including us.
Now, with 6 days “officially” left before the August 2 deadline, the two sides seem to be getting further apart instead of closer together on reaching an agreement. The debt-limit headlines will continue to grab the front page news, but Wall Street and the bulls are getting a little worried about a ratings downgrade, which is a given or possible default if something doesn’t get done soon.
Although the bulls battled back by midday, with the Nasdaq reaching positive ground, the market finished in negative territory and at its lows for the day.
The Dow tanked 91 points, or 0.7%, and finished at 12,501. The index reached a low of 12,489 but remained in our 12,500-12,600 zone. However, we expect further weakness to 12,350 – and hold your breath – Dow 12,000 if the knuckleheads drag this out until the weekend. Resistance is still at 12,800. Side note: 3M (MMM, $89.93, down $5.14) fell over 5% yesterday and accounted for nearly half the losses, or 40 negative Dow points.
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