The market has dropped 12% from its high in April and is down about 4 1/2% for the year. While disconcerting as this is – it is neither unprecedented nor unexpected – we have known that volatility in the markets will be high as the global economy struggles to gain solid footing. While Friday’s job report in the US was more positive than expected, we need to see real growth of jobs to dampen the uncertainty.
S&P downgraded US debt for the first time ever despite all the political wrangling over a deal to raise the debt ceiling last week. The fundamental distress this rating will cause for our economy is probably limited but it does give all pause and concern for when the elected officials in Washington will stop the nonsense and get to work on helping our country emerge from the current market malaise.
The Euro Zone debt crisis continues to weigh heavily on global markets. The European Central Bank is getting more aggressive and Italy accelerated steps in its austerity program in order for the ECB to buy their bonds. This can help alleviate some aspects of the Euro sovereign debt crisis but much work there still needs to be done.