The economic data this week is not dramatically different from last week’s or the week before. The only new factor at play in the psyche of investors is the luster-less conclusion of the debt crisis, the debt deal, and the show of gridlock in Washington.
The deal will not solve the debt problem but it will castigate the middle and lower classes, thus crippling consumption even more. It has shown ideological rigidity on one side of the political aisle and ineptitude on the other.
This together with the euro zone crisis put the fear of a full-blown recession in the minds in Wall Street.