WASHINGTON (CBSDC/AP) — The Dow dropped more than 100 points shortly after the opening bell despite Congress reaching an 11th-hour debt ceiling deal.
Investors warn that the markets are still wary of Congress since the new deal only allows the Treasury Department to borrow through Feb. 7.
Lawmakers “are only deferring, not triaging, the situation,” Mark Luschini, chief investment strategist with broker-dealer Janney Montgomery Scott, told CBS News. “That leaves me with some trepidation that we’ll be revisiting this in the not too distant future.”
Luschini says there could be a pullback since stocks were trading near record highs and that third-quarter corporate earnings have been mixed.
“This could be one of those ‘buy the rumor, sell the news’ events,” Luschini told CBS News. “I expect to see some profit-taking because we’re getting to the levels we were at before all the trouble.”
Analysts worry about the economic news that wasn’t released due to the government shutdown, including the jobs report.
“Consumers were clearly losing momentum since the start of the year as a result of lackluster job creation and minimal income growth, but a dysfunctional government is further undermining confidence and exacerbating cautious spending patterns,” Lindsey Piegza, chief economist with brokerage firm Sterne Agee, told CBS News. “Back-to-school sales were lackluster, and retailers are reporting increasingly disappointing September sales despite early discounting.”
IMF managing director Christine Lagarde said the American economy needs more stable long-term finances.
“It will be essential to reduce uncertainty surrounding the conduct of fiscal policy by raising the debt limit in a more durable manner,” Lagarde told The Associated Press.
Lawmakers reached a last-minute deal Wednesday to end the 16-day government shutdown and avert possible U.S. default. Obama signed the bill which keeps the government open until Jan. 15 and continues to let the Treasury borrow until Feb. 7.
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