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Stocks Sag on Debt Fears; Dunkin Soars 40%

Stocks slumped across the board for a third session Wednesday following an unexpected drop in durable goods orders and as worries escalated over a possible U.S. debt default.

The Dow Jones Industrial Average tumbled, led by Cisco and Caterpillar , after closing lower for the third-straight session.

The S&P 500 and the tech-heavy Nasdaq were also sharply lower. The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped above 22.

All three major averages are in negative territory for the week.

Most S&P sectors were lower, led by industrials and techs.

House Republicans delayed a vote on the debt bill until Thursday. Most people still expect a last-minute deal but it is still likely the rating agencies could downgrade the nation's credit rating.

The Congressional Budget Office estimated that the plan by Senate Majority Leader Harry Reid, D-Nev., would result in savings of just over $2 trillion, some $500 billion less than Reid had promised.

The Senate bill, however, would save more than a House Republican proposal by Speaker John Boehner, R-Ohio. Nonpartisan congressional scorekeepers said his proposal would cut spending less than advertised, about $850 billion over 10 years, not the $1.2 trillion originally promised.

Gold rose to a new high above $1,625 an ounce, marking the sixth time it's reached record levels in two weeks.

Meanwhile, oil prices slippedto session lows after a government report showed that crude inventories unexpectedly jumped for the first time in nine weeks. U.S. light, sweet crude fell below $98 a barrel, while London Brent crude slipped under $118.

Dunkin Brands soared more than 40 percent in its trading debut on the Nasdaq. The parent company of Dunkin' Donuts sold $422.75 million worth of shares at $19 apiece in the biggest IPO deal of the week. The company plans to use proceeds from its IPO to repay debt and to help double the number of Dunkin' Donuts outlets in the U.S. over the next 20 years.

Industrials lagged as Dow components United Tech , GE and Caterpillar all declined.

On the earnings front, Boeing gained after the world's largest aerospace and defense company said earnings jumped 20 percent, helped by higher commercial airplane sales.

ConocoPhillips advanced after the oil giant said profit topped expectations as higher crude prices helped its exploration business.

Dow Chemical also rose after the chemical maker posted a better-than-expected profit as higher prices and volumes helped offset a jump in raw material costs.

And Aetna climbed after the health insurer posted a profit far above estimates and raised its full-year forecast. Meanwhile, rival WellPoint said while quarterly earnings beat estimates, the company warned that costs for its Medicare plans for seniors were higher than expected this year.

Amazon.com jumped to hit an all-time high after the online retailer reported better-than-expected earnings Tuesday afternoon. At least four brokerages raised their price targets on the firm.

Meanwhile, Juniper Networks plunged almost 20 percent after the tech firm warned that its results would miss expectations. The firm also forecast weak results in the current quarter and said it expects reductions in spending in the near-term. At least eight brokerages reduced their price targets on the company.

Nokia slipped after Moody's downgraded its rating on the Finnish cell phone company by two notches.

On the economic front, new orders for durable goods dropped 2.1 percent in June, reversing the previous month's downwardly revised 1.9 percent increase, according to the Commerce Department. Durable goods are items that are meant to last three years or more. Economists expected orders to gain 0.3 percent, according to a poll from Reuters.

The Fed's Beige Book on the economy is released at 2 pm ET.

Weekly mortgage applications declined last weekfollowing a sharp jumped in the prior week as interest rates edged higher, according to the Mortgage Bankers Association.

On Tap This Week:

WEDNESDAY: 5-yr note auction, Beige Book; Earnings from Aflac, Symantec, Visa, WholeFoods
THURSDAY: Weekly jobless claims, pending home sales, Kansas City Fed survey, Richmond Fed Lacker speaks, 7-yr note auction, San Francisco Fed Williams speaks, money supply; Earnings from AstraZeneca, Credit Suisse, DuPont, ExxonMobil, Royal Dutch Shell, Sanofi, Bristol-Myers Squibb, DR Horton, Kellogg, Motorola Solutions, Sprint, Time Warner Cable, Chesapeake Energy, MetLife, Motorola Mobility, Starbucks
FRIDAY: Employment cost index, GDP, Chicago PMI, consumer sentiment, farm prices; Earnings from Chevron, Merck

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