Washington and Wall Street: Investors' Dread-Letter Day: 11/23 --- Mystery Surrounding Budget 'Supercommittee' Keeps Markets in Limbo as Deadline Nears
Call it Wall Street's other geopolitical driver, one played out not in Athens or Rome, but close to home in Washington.</br></br>As stock-market investors fret over sovereign-debt contagion in Europe, a Nov. 23 deadline for the U.S. Congress's so-called budget supercommittee is fast approaching. The committee is assigned to devise at least $1.2 trillion in deficit-reduction measures over 10 years, or else automatic cuts ordained by Washington's summer debt-ceiling agreement are triggered.</br></br>Friday's market action gave little hint that investors remain perturbed over Europe's debt situation, much less any happenings in Washington, as the Dow Jones Industrial Average surged by triple digits. But the gains came on the kind of light volume that usually suggests a lack of participation.</br></br>The outcome in Washington is a large unknown for the stock market, which is a creature vastly more wary of mystery than bad news. Bad news can at least can be analyzed and quantified. A large political unknown, by contrast, is all but sure to be a source of market volatility.</br></br>The underlying fear is that lawmakers' cuts are too small to persuade credit-rating firms to maintain their current ratings on U.S. government debt. If that happens, stocks could engage in a replay of their plunge in August, which followed Standard & Poor's downgrade of the U.S. credit rating. That action coincided with a surge of fears over Europe's sovereign-debt crisis.