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U.S. stocks slumped, giving the Standard & Poor’s 500 Index its longest losing streak since September, amid concern the government will be forced to submit to $1.2 trillion in automatic spending cuts if lawmakers fail to agree on a deficit plan.
Financial stocks posted the second-biggest decline among 10 industries in the S&P 500, dropping 2.9 percent, as 493 out of 500 companies retreated. The Dow Jones Industrial Average declined 292.94 points, or 2.5 percent, to 11,503.22 today after a Democratic aide said the supercommittee that was supposed to dissolve congressional gridlock in Washington is instead on the brink of failure.
The decline pushed the S&P 500 below levels representing the top of a price range that prevailed in the two months after the U.S. was stripped of its AAA credit rating by S&P on Aug. 5. Rallies after the downgrade brought the S&P 500 to closing highs of 1,204.49 on Aug. 15, 1,218.89 on Aug. 31 and 1,216.01 on Sept. 16, according to data compiled by Bloomberg.
Today is the deadline for the Congressional Budget Office to receive information for scoring a proposal in advance of the supercommittee’s Nov. 23 target date for reaching a deal. The 12-member bipartisan supercommittee likely will announce today that it can’t reach agreement on deficit savings, according to a Democratic aide.
U.S. shares joined European equities in retreating. France’s rising financing costs are increasing the nation’s fiscal challenges, according to report issued by Moody’s Investors Service. Germany’s Finance Ministry said the country’s expansion is “noticeably slower” this quarter.
Citigroup Inc. plunged 5.4 percent, while Hewlett-Packard Co., Boeing Co. and Caterpillar Inc. slumped more than 3.8 percent.
Pharmasset soared 85 percent to $134.26. Gilead Sciences, the world’s largest maker of HIV medicines, agreed to buy Pharmasset, betting that its experimental hepatitis C treatments will lead the next generation of therapies in a market that may reach $20 billion by 2020. Gilead Sciences slid 11 percent to $35.37.
Research In Motion Ltd. fell 6.5 percent to $17.01 after analysts at RBC Capital Markets and JMP Securities LLC cut their profit estimates, citing increased competition, and the smartphone maker said some customers couldn’t turn on their BlackBerry Bold devices.
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