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Stocks retreated deep into negative territory on Wednesday as Congress remained stalled on resolving the debt ceiling, and an economic report showed a significant slowdown in the U.S. manufacturing sector.

The Dow has now fallen four days in a row as investors grow increasingly worried that Washington won't solve the the country's budget woes in time to meet the August 2 debt ceiling deadline.

"Take the uncertainty over the debt ceiling and add the weak economic data, that's not going to help the market's performance," said Michael James, senior equity trader at Wedbush Morgan Securities. "Investors are in selling mode."

Washington's debt ceiling negotiations remain stagnant. House Speaker John Boehner said late Tuesday he will rewrite his debt legislation, after the Congressional Budget Office (CBO) said the bill would reduce deficits by only $851 billion over 10 years.

The CBO said Wednesday a competing proposal from Senate Majority Leader Harry Reid would save $2.2 trillion over a decade.
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The two competing proposals give investors little comfort that Congress is any closer to reaching an agreement, with only six days left before the Aug. 2 deadline.

Ablin said he expects the debt ceiling will get raised, but investors should get used to the possibility that the U.S. will likely no longer have a "AAA" rating.

"What we're looking at is Washington's inability to solve the big problems as compared to other countries that have done a much better job of addressing these issues," he said. http://money.cnn.com/2011/07/27/markets/markets_newyork/index.htm?hpt=
hp_t1

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