The worsening European crisis, negative reports on the U.S. economy and Congress’ budget cuts have resulted in dramatic market downturns over the past few weeks. Last Monday saw gold fall past $1,700, but as investors chose the metal as their safest bet it rebounded slightly. Silver also shifted in value, falling on Monday, November 21st and rising again on Tuesday. Reviews later showed that stocks have continued their losing streak, and the S&P posted a loss for the sixth day in a row.
David Kostin of Goldman Sachs explained that Congress’ failure to agree on budget cuts has left equity markets and the U.S. credit rating with deep concerns. “Failure to reach an agreement on at least the minimum required savings will reflect poorly on Congress and the S&P 500 could fall by 10% to 1,100%. The wide range of possible outcomes on both the super committee process and the unstable political economy in Europe drives our view that investors should assume the worst while hoping for the best.”
The U.S. Commerce Department reported that GDP grew less than expected- only 2% from July to September. Daniel Clifton, policy strategist with Strategas Research said “We would expect further downgrades, a first downgrade for Moody’s and Fitch and possibly a second downgrade from S&P.”