I'm a believer that for the broad indices (not necessarily individual stocks), the news will fit whatever move the market makes. Market is up it's because of X and market is down, it's because of Y. To me, hence, news is meaningless for indices.
What matters to me is how investors react to what happens to the market? So let's say price starts going down...based on all the buying last few days and lack of support, there's a lot of stops to trigger. More stops triggered lead to more selling and it's a cascading effect. So, even though something small in the news may trigger the snowball effect, it's probably meaningless news in hindsight. By the time prices really snowball, then the media is like "Oh yea - it's because of X" and it's some big event that only becomes easily discernible after most of the damage has been done.
So what could be bigger than a default? No idea, but one thing is clear to me is how much worse we are at solving issues. Each drama has resulted in practically an 11th hour deal. This latest one almost brought the US to default (to the last day). It's hard to believe we suddenly figure out how to solve the next issue in a more timely manner. In fact the next issue is right around the horizon and time is running short.
To solve the issues, my hunch is the market wants to pressure decision makers way beforehand in order to urge decision makers to start resolving quickly.
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