Markets drop as debt limit rises

Financial markets took no relief from the passage and signing of an increase to the federal debt limit, as underlying concerns about the economy drove the stock market to even deeper lows.

The Dow Jones Industrial Average dropped below the 12,000 mark, closing down 2.19 percent for the day. The downturn marked the eighth straight day of losses for the Dow — the first time since 2008.

The other two major stock indexes — the S&P 500 and NASDAQ — both also dropped more than 2 percent on the day.

Even as the Senate signed off on a deal to raise the debt limit and avert a government default and the White House signed it into law, markets continued a steady march into the red, beginning the day on the downswing and continuing lower from there.

FitchRatings' announcement that the debt deal should preserve the nation's AAA credit rating did not persuade investors to take a more bullish stance on the day's investments.

Some economists had expressed concern that the debt-limit deal consisted entirely of spending cuts and did not include any provisions intended to stimulate the economy in the near term. The last two jobs reports and Friday's report on the nation's economic growth have indicated that the recovery is waning and could be in need of a boost.

Meanwhile, investors continue to seek out safe havens for their funds, driven by continued concern about the debt crisis in Europe and the slowing of the economic recovery in America. Gold hit yet another record high on Tuesday, reaching $1,645 an ounce.

And while the looming threat of a default served as a persistent threat to Treasury bonds, investors flocked to the safe investment Tuesday. The yield on 10-year Treasury bonds fell to 2.674 percent — its lowest level since November.

---