Updated Nov. 21, 2011
Stocks slumped Monday as concern grew that $1.2 trillion in automatic federal budget cuts will be triggered if lawmakers fail to reach a deal, while Moody's Investors Service warned of France's fiscal challenges.
The Dow Jones industrial average closed down 248.85, or 2.11%, at 11,547.31; the Dow had been down as much as 330 points earlier Monday. the S&P 500 fell 22.67, or 1.86%, to 1,192.98; and the Nasdaq composite closed down 49.36, or 1.92%, to end at 2,523.14. All numbers are preliminary.
The supercommittee created to cut the deficit said after the close of U.S. exchanges that it failed to reach a deal.
U.S. shares joined European equities in retreating. The Stoxx Europe 600 index declined 3.2%, the most since Nov. 1. France's rising financing costs are increasing the nation's fiscal challenges, according to report issued by Moody's Investors Service. Germany's Finance Ministry said the country's expansion is “noticeably slower” this quarter.
“The global sell-off in risk assets reflects concerns about the inability of policymakers to catch up with unsettling economic and financial realities, particularly in Europe and America,” Mohamed A. El-Erian, CEO and co-CIO at Pacific Investment Management Co., said in an e-mail. “The sell-off is amplified by growing strains in the underlying functioning of markets.”