compromise law that keeps the government from defaulting on its debts, but the financial markets which had been so rattled by the possibility of default found something else to worry about today. there is new evidence that the economic recovery is in trouble. and that sent stock prices plunging. the dow closed down 265 points. the index which was closing in on 13,000 in the spring fell below 12,000 today. and the s&p 500 has now given up all of its gains for the year. we have reports tonight from norah o'donnell at the white house and anthony mason on wall street. first anthony. >> reporter: scott, the dow had its worst day in two months and ended its 8th straight closing session down. that's the longest losing streak we've seen since the depths of the financial crisis back in october of 2008. now, there was no celebration of the debt deal down here because there was more evidence the recovery is stalling out. consumer spending fell in june for the first time in nearly two years. that worried wall street because consumer spending drives 2/3 of the economy. there was one bit of good news late today, moody's reaffirmed a triple "a" credit rating for the u.s., but it did put the u.s. on negative outlook, scott. >> pelley: anthony, doesn't solving the debt ceiling crisis help at all? >> reporter: actually in the near term, scott, it doesn't. the problem here is we've got economic growth essentially flat lining in the first half of the year. the worry is the debt deal is going to cut government spending in the near term, the question is: where is the economic growth, where is the job growth going to come from? what you're seeing on wall street is wall street pricing in the rising risk of another recession, scott. >> pelley: thanks, anthony. well, there wasn't much joy today in washington either over that deficit compromise that no one seems to love. there was no signing ceremony in the rose garden this time. just an unceremonious still photo of the president all alone signing the law and looking like a man with buyer's remorse. here's chief white house correspondent norah o'donnell. >> reporter: good evening, scott, and the deal is done. the immediate crisis over. yet there's no celebration here tonight. it is clear that the president is frustrated by some of the concessions he had to make and is now preparing for round two of this fight. >> it was a long and contentious debate. >> reporter: in the rose garden today president obama did not thank or congratulate congress as he usually does after major bills are passed. >> it's an important first step to ensuring that as a nation we live within our means. >> reporter: instead the president argued there's more work ahead, especially on tax reform. >> since you can't close the deficit with just spending cuts, we'll need a balanced approach, where everything is on the table. and it means getting rid of taxpayer subsidies to oil and gas companies and tax loopholes that help billionaires pay a lower tax rate than teachers and nurses. >> reporter: the first phase of the bill includes almost $1 trillion in immediate spending cuts. the second phase sets up a special committee in congress, made up of six democrats and six republicans from both houses. tasked with finding up to another $1.5 trillion in savings. >> the ayes are 74 and the nays 26. >> reporter: democrats like dick durbin reluctantly supported the bill. >> i will vote for this measure and obviously with a heavy heart. >> reporter: majority leader harry reid who also voted yes made no effort to disguise his outrage. >> the riches of the rich have contributed nothing to this. the burden of what has taken place is on the middle class and the poor. >> reporter: tennessee's lamar alexander was among republicans who hailed the agreement. >> this is a change in behavior. from spend, spend, spend to cut, cut, cut. >> reporter: as minority leader mcconnell claimed a victory, congratulating his party for holding the line against new taxes. >> while the president may not have particularly enjoyed this debate we've just been through, it was a debate that washington very much needed to have. >> reporter: and will continue to have, so while the president said today that everyone needs to chip in and pay their fair share, there were a number of republican senators who said today they are comfortable that their leaders will not appoint senators to that super committee that will raise taxes. scott? >> pelley: thanks. the last time the president and the congress compromised on a major spending bill, republicans got tax cuts and mr. obama won an extension of unemployment benefits. but in this latest compromise, there are only budget cuts and no relief for those suffering in this economy. we asked dean reynolds to look into this. >> reporter: the sigh of relief in washington over the debt deal dissipated long before it could reach davlin street on chicago's north side. where 59-year-old kevin kalmes lives alone in her foreclosed home, paging through a bumper crop of august bills and wondering what congress was thinking. >> i truly, truly don't understand both the hubris in it and the lack of compassion and empathy, i don't understand where these people come from. >> reporter: unemployed as a production manager since march of 2010, she was hoping there would be something in the legislation that dealt with chronic joblessness, and specifically with jobless benefits. hers run out in december. staring into the abyss? >> yes. how, i have no clue, i have no clue what will happen. >> reporter: the extension of unemployment benefits to 99 weeks came last december. >> i always felt good when i had my car because i kept telling everybody at least i could live in my car and go places and everybody would just be chagrined at that. but i had surrender my car. so now literally when this place is gone, i have no place to live. >> reporter: and her story is hardly unique. there are nearly 4 million americans who have had their unemployment benefits extended once or twice, and who may now lose them at the end of this year. >> pelley: thank you, dean. there is a bit of an unemployment crisis at the f.a.a. tonight, a political dispute in congress is holding up a deal to fund the agency. now the partial shutdown that began ten days ago could last into september. it's not a safety issue, mostly it's airport construction projects that have been stopped. but about 74,000 workers have been laid off. with washington about as polarized as ever, there was one moment of absolute unity last night. politicians of every stripe rose and applauded as congresswoman gabrielle giffords stepped onto the house floor for the first time since she was shot in january. nancy cordes is at the capitol where they are still talking about it. >> we all want to welcome back our wonderful colleague, congresswoman giffords, here. ( applause ) >> reporter: part of what made the moment so magical was that it was so unexpected. the vote had almost ended, when a smattering of applause broke out. listen to it build as members realize the arizona democrat is in the chamber. they stand up to catch a glimpse and soon she's surrounded. thank you, thank you, she mouthed, as colleagues gingerly embrace her. some overcome by emotion, like her close friend and fellow democrat, debbie wasserman schultz. >> so, you know, i think she just fulfilled the hopes and dream of all her colleagues and her constituents too. >> reporter: gifford returned to congress to support a debt deal that has left the town sour and exhausted. >> then when she voted and that green light lit up next to her name indicating that she had cast her vote, it was as if to say "gabby is back." >> reporter: of course, congressman steve israel knows she isn't quite back, and won't be for some time. giffords is still undergoing intensive physical therapy in houston, after being shot in the head in a tucson rampage that killed six. so she's walking very well now. her chief of staff was at the congresswoman's side last night. >> it was a very proud moment for her. it was really the only vote that mattered since the shooting and she didn't want to miss it. >> reporter: she confirmed today that team giffords is laying the ground work for a re-election bid in 2012. so giffords can run again if she feels ready. >> pelley: thank you, nancy. tropical storm emily is rolling through the caribbean, it's about 200 miles south of puerto rico, gaining strength as it moves west. forecasters say emily could reach south florida by the end of the week. in texas, there is a historic drought, and that has revealed a piece of american history. it is part of the space shuttle columbia, which broke apart on reentry in 2003, killing all seven members of the crew. this artifact of the shuttle age was found because lake nacogdoches is nine feet lower than normal. when it comes to cutting the deficit: can a new committee of 12 do what the president and the leaders of congress could not? 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>> it's not like a place that you have to look very far. everywhere in the city there are people streaming in, particularly the thing that jumped out at me is the amount of children and how incredibly frail they were. the women, almost every one of them is carrying at times what looks like skin and bones, and i honestly, there are moments i didn't know if the child they were carrying was alive until they shifted and you could see that the child was moving. >> pelley: in terms of the people who are truly starving that we see in your photographs, are we talking about dozens, hundreds, thousands? >> thousands, many thousands of people. and the fact that they're actually coming into mogadishu, one of the most unsafe cities in the entire world, says a lot about the condition of what they're experiencing in their villages. and how desperate they have to be. >> pelley: one of your photographs is particularly striking, it's a photograph of a child lying in a fetal position, clearly starving to death. i wonder if you could tell us the story of that picture. >> this particular child really struck me how skinny this child was. and the position of how the child was laying on the table, was just really striking, and i thought really got that point across of how desperate it is there. >> pelley: you were in mogadishu for four days, i wonder in the time that you were there, any signs of improvement, any hopeful signs? >> not at all. if anything it happened that this would probably get worse before it gets better. they're arriving literally with nothing, and it's a very desperate situation for them. >> pelley: tyler hicks, photo journalist for the "new york times", thank you very much for your help. >> thank you. >> pelley: for information on how you can help the people of somalia, go to cbsnews.com, we have a list of aid organizations that are accepting donations. are they ever going to straighten out the mess in washington? we asked two people who know most. e new regenerist wrinkle revolution... relaxes the look of wrinkles instantly, and the look of deep wrinkles in 14 days. ready, set, smooth... regenerist. from olay. for his dentist, the choice is clear. fact is, more dental professionals brush with an oral-b toothbrush than any other brush. trust the brush more dentists and hygienists use, oral-b. summertime is now a happy time. when we can eat what we want and sleep soundly through the night. prevacid®24hr prevents the acid that causes frequent heartburn, all day, all night. just don't feel like they used to. are you one of them? 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