Dow Down 300; Supercommittee Agreement Not on Horizon

(Newsroom America) -- Wall Street took another hit Monday as investors sold ahead of Thanksgiving, and the U.S. and Europe continued to struggle with their debt crises.

Reports said the major indices fell more than 2 percent, led by financials and energy in a week shortened by the holiday.

Each of the Standard & Poor's 500 10 sectors fell by more than 1 percent, as Nasdaq tech gauge fell on reports from online retailer Amazon plunged more than 5 percent and Intel losing 3 percent.

Meanwhile, the 12-member congressional "supercommittee" charged with finding $1.2 trillion in budget cuts bumbled towards its Wednesday deadline. Without an agreement, there will be automatic cuts of about $1 trillion in a number of budget areas including defense.

Leaders on both sides expressed pessimism on Monday that a deal would be done.

Europe's debt crisis is also weighing heavy on investors' minds.

"Europe is now facing a credit crunch of rather large proportions, and this is also why the recession is likely to be more protracted than many currently realize," David Rosenberg, senior economist and strategist at Gluskin Sheff in Toronto, said Monday.

"Banks are shedding their assets. Investors are increasingly reluctant to lend to either sovereigns or financial institutions there," he added. "Lenders are finding it difficult to finance their day-to-day operations with short-term funding. This is a lot like 2008 but with more twists."

Other economists have expressed doubt the supercommittee will reach an agreement.

"Something still may be cobbled together, but the federal deficit would remain too large and could easily fly out of control. Genuine progress is not possible, because the principals won't accept the facts," writes Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland.

"Congress may cobble a solution to stave off disastrous defense and discretionary spending cuts. However, until Congress adopts realistic trade, energy and regulatory policies to instigate more rapid growth, and better regulates health care...the federal government simply won't be able to raise taxes enough to permanently meet its responsibilities," Morici said.

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