The debt deal "does not put the U.S. on a sustainable fiscal path," economists at Barclays Capital wrote in a note to clients, adding "weakness in U.S. growth has the potential to offset most of the savings claimed by the debt reduction package."
Every major sector fell sharply on the day, leaving few shelters in the equities markets. Conglomerates like General Electric (GE: 17.21, -0.76, -4.23%) and United Technologies (UTX: 78.93, -3.41, -4.14%) struggled the most on the day.
In a continued flight to safe assets, gold soared to yet another nominal record high. The precious metal settled higher by $22.80, or 1.4%, to $1,645 a troy ounce.
The euro zone debt crisis also worried traders on Tuesday after BNP Paribas, Europe's biggest lender by assets, took a roughly $757 billion writedown on its Greek sovereign debt. Greece, which has an enormous public debt burden, is in need of a rescue package from euro zone authorities and has seen its credit rating being sliced into junk territory and just slightly above default.
There were also concerns that the sovereign debt crisis would spillover into larger, more prominent economies, like Spain and Italy, according to Peter Boockvar, managing director at Miller Tabak + Co
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