Monday kicked off the week with jitters over the lack of agreement between Democrats and Republicans on how to deal with the August 2 deadline to raise the debt ceiling to avoid an unprecedented default on the part of the US. Still, losses were curtailed to less than a percent despite the doubt. Stocks dropped again on Tuesday as the debt debate war raged on, although low volume is indicating that investors are unsure of how to react to the situation. Selling accelerated on Wednesday as investor sentiment is that a debt rating downgrade from AAA by S&P or Moody’s may be a foregone conclusion. On Thursday much of the same concern led stocks down again for a moderate loss despite being well into the black earlier in the trading session. On Friday the Dow made it 0 for 5 for the week and six straight losing sessions following news that the initial estimate for the second quarter GDP reading came in at a disappointing 1.3%.
While all the indexes were down significantly this week, it is a bit surprising the damage was not worse given the grave circumstances concerning the nation’s debt deadline.