Stocks were pummeled Monday as investors reacted to the failure of the U.S. deficit reduction panel to reach an agreement and to the growing financial crisis in Europe. The Dow dropped 249 points while the S&P 500 ended the day at 1,182, its lowest close in over six weeks. Treasuries rallied early and managed to hold their gains with the 10-year closing at 1.95%. The turmoil in European debt markets created stellar demand for the U.S. Treasury’s two year note auction, so we will see if that carries over to today’s auction of $35 billion in 5 year notes.
Economic data this morning consists of the first revision to the third quarter GDP, which was revised lower from 2.5% to 2.0%. Later today we will get the FOMC Minutes.
U.S. stock and bond markets are trading flat after digesting Monday’s volatility and will most likely quiet down as folks wind down towards the Thanksgiving Day holiday. Prices on mortgages have improved slightly.
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