US stocks extend losses as relief over debt deal faded

August 2nd, 2011 - 4:33 am ICT by IANS  

Barack Obama New York, Aug 2 (IANS) US stocks ended lower after a short-lived rally Monday, with the Dow extending losses to the seventh straight session, as relief over a debt limit deal faded and weak economic data reminded investors the economy was still facing strong headwinds, Xinhua reported.

Major indexes surged more than one percent at the open as investors breathed a sigh of relief after US President Barack Obama and Congressional leaders said they had agreed on a deal to raise the nation’s debt ceiling, thus avoiding an unprecedented default.

However, gains were quickly erased as enthusiasm faded. Investors were worried that the long-term debt problems were far from being settled and a downgrade of the triple-A debt rating is still very possible.

Moreover, the latest data once again provided evidence that the US economy was losing momentum.

According to the Institute for Supply Management (ISM), the pace of growth in the US manufacturing sector slowed more than expected in July while new orders hit their lowest level since June 2009.

The Dow Jones industrial average fell 10.75 points, or 0.09 percent, to 12,132.49. The Standard & Poor’s 500 was down 5.34 points, or 0.41 percent, to 1,286.94. The Nasdaq Composite dropped 11.77 points, or 0.43 percent, to 2,744.61.

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