Balanced Budget an Election Away?

CASPER, WYOMING: Newt Gingrich sent stock and bond prices tumbling with a public prediction that congressional Republicans and the White House would not arrive at a balanced-budget compromise before Election Day. "I think the odds are better than even as of today that there will be no agreement," the House Speaker said Wednesday from Casper, Wyoming. "It may just be that we need one more election." Minutes after his comments, stock prices dropped 35 points. By the end of trading, the Dow Jones industrial average had plunged 97.19 points, a steep decline that compounded a 67.55-point drop on Tuesday. It was the ninth-worst point drop ever, and the biggest since budget negotiations stalled on December 18. In shattering the prospect of the first balanced budget in three decades, the Speaker's remarks helped deepen investor pessimism about economic prospects. "What we're hearing from the market is that the absence of a budget deal will lead to higher interest rates," reports Deputy Chief of Correspondents Rick Hornick. "That would lead investors to pull their money out of stocks. But it may be a stretch to say that the trouble in Washington fully accounts for what has happened in the markets this week. Technology stocks are also falling. Investors seem to think they've overbought them. What's clear is that the mood of investors is growing sour."