Wall Street is trading lower as Congress is still debating on how to tackle the nation’s budget issues and raising the debt ceiling. On Friday, President Barack Obama and House Speaker John Boehner said that budget talks had broken down, and no real progress was made over the weekend. The stock market experienced a minor sell off today, considering the implications that a U.S. default would have on the global economy, this could indicate that most investors still believe that a deal will be done before the August 2 deadline. With less than one week left, the pressure is intensifying for lawmakers for reach an agreement. Boehner is currently working on a plan that would cut $1.2 trillion from the nation’s deficit over 10 years and raise the ceiling twice. Senator Harry Reid is working on a competing plan that would cut $2.5 trillion over the next decade with no new tax increases. The impasse in Congress is over tax increases and whether the nation’s budget plan should focus on generating more revenue or strictly on spending cuts. Even if the U.S. debt ceiling is raised, credit rating agencies have still warned that the nation’s prized AAA credit rating could be downgraded if no longer-term deal is passed. Treasury yields have pushed higher as bond investors become increasingly uneasy with the deadline getting closer. Gold prices have edged up to new highs, hitting $1,612 an ounce. Oil fell to $98 a barrel due to concern that a failure to raise the debt ceiling could mean slower economic activity and less demand for crude.
Major U.S. Stock Indices
DJIA: 12,642.90 (-0.30 percent)
S&P 500: 1,342.20 (-0.21 percent)
NASDAQ: 2,856.72 (-0.07 percent)
Russell 2000: 837.49 (-0.51 percent)
In other news:
- Moody’s (MCO) cuts Greece’s credit rating deeper into junk status, signifying that it expects the nation to default on its obligations as part of a bailout plan. [WSJ]
- Two fund managers on why they think Google (GOOG) and Microsoft (MSFT) are smart value investing plays in the new tech boom. [Fortune]
- As stated above, most investors expect Congress to get a new budget deal done before the deadline, but are they properly prepared in case of a default? Currencies may be a way to hedge your portfolio. [CNBC]
- Is Netflix (NFLX) overvalued or undervalued? The online streaming and DVD-by-mail company has seen a huge surge in its share price, but has since lost a little steam. [The Street]
- Well, at least one major U.S. stalemate came to a happy conclusion. [Yahoo!]
Check back for more news.