Debt Ceiling Debate: Wall Street Futures, U.S. Dollar Drop With No Deal In Place

NEW YORK (David Gaffen) - Wall Street futures fell, the dollar dropped and gold rallied as Washington appeared no closer on Sunday to raising the debt ceiling to avert a devastating default.

The decline in futures points to a poor open for markets and shows investors are getting increasingly worried about the failure of legislators to coalesce around one approach.

"The fact that they seem to be jumping from one type of proposal to another and not converging on anything is beginning to worry markets," said Steven Englander, head of G10 FX strategy at Citigroup.

S&P 500 futures fell at the open of electronic trading. The benchmark S&P was down 0.9 percent, or 12 points, at 1,328.70.

Early currency trading suggested a move away from the dollar, with the biggest drop in the greenback coming against the Swiss franc. In early Asian trading, the dollar dropped to 0.8132 against the Swiss franc, down 0.7 percent.

In commodities trading, gold futures rose to $1,610 an ounce, up $8.70, a new record for the precious metal.

White House officials and Republican leaders scrambled on Sunday to reassure global markets the United States would avert a debt default, but the two sides were still not close to a deal. House Speaker John Boehner told fellow Republicans on a conference call that a large-scale debt deal was not possible with President Barack Obama.

An aide to U.S. Senate Majority Leader Harry Reid told Reuters on Sunday the Nevada senator was outlining a plan that would cut $2.5 trillion in spending and increase the debt limit that he hoped would be brought to the Senate floor this week.

Earlier in the day, White House Chief of Staff Bill Daley warned that there would be a "few stressful days" ahead for financial markets.

"There's an old saying that things don't matter until the day they matter; we're getting close to the day when it will matter," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

In the past few days, markets seesawed on reports suggesting progress toward an agreement to cut the deficit that would allow for the U.S. debt ceiling to be raised and avert a market-roiling default.

(Editing by Dale Hudson)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[Gil Burt]

05:01 AM on 08/04/2011

I am also new investor in penny stocks.This investing is very risky.

ENTB

[JoeWolfe]

10:17 PM on 09/05/2011

Hi Gil,

There are ways to reduce risk when you trade penny stocks. You might benefit from reading my article:

http://how-to-make-money-with-penny-stocks.blogspot.com/2011/07/how-to-make-substantial-amounts-of.html

I personally think the debt ceiling debate was nothing more than political posturing!

Joe

[Viper]

09:36 AM on 07/25/2011

Lets look at where the repug/tea party is today... The people running the repug party today are the John Birch Society( founded by the Koch Brothers father, who made the money) and was for many years thrown out of the repug party as being crazies and racist (and they were). But today they are mainstream repugs.

They Called IKE a communist. The last great repug, who rebuilt the infrasture that made America great,was pro labor/unions/rising wages and led to a doubling of all real wages by 1976... And that infrastructure is now past its design life expectancy... and yet with a 3.5 trillion infrastrcuture problem, you hear not a word from repugs on that problem or any job creation plan, other than the job creators, the rich will create jobs, when they have been net exporters of jobs for 25 years and have billions invested in other countries now, because only the U.S. and repugs were dumb enough to support outsourcing and deindustrilaization..


Per even Mike Huckaby as he said this past week, not even rRagan could run as a republican today. Thats how extreme and out of touch with reality the Repug party has become.

Regards

[WOODSTOCKER51]

08:01 AM on 07/26/2011

founded by the Koch Brothers father, who made the money"
BY WORKING WITH JOE STALIN..AND USING THE RUSSIAN PEOPLE AS SERFS AND SLAVES...WHILE PUMPING OIL FROM THE GROUND..AND DESTROYING THE ENVIRONMENT...
...FRED KOCH........"A REPUBLICAN HERO"

[Viper]

09:20 AM on 07/25/2011

Repugs... you had the repug congress cut FEMA, then on the otherhand you had Gov Perry complaining that the government/FEMA was only picking up a mere 75% of his wild fire expense...

I guess his prayer meeting to fix the wildfires did not work since they trippled in size afterwards...

Regards

[kamachanda]

10:18 PM on 07/25/2011

God wanted to give Governor Perry a preview of his afterlife....

[WOODSTOCKER51]

08:02 AM on 07/26/2011

HOW TRUE.PERRY BEST GET USED TO "THE HEAT"...

[v eyepete]

09:18 AM on 07/25/2011

For all those who don't get out of the country much the rest of the world is wringing their hands with glee regarding the sad state of our dollar. They see it as some sort of just punishment or falling from grace. It is very embarrassing, aside from the monetary side of it. It's like rooting for a team everyone hates. If the US were a football team, no fan would be happy with this state of affairs. The Republicans are responsible for this mess and it is sad that so many middle class people have been brainwashed and duped into voting for a party that is slowly destroying them and their country.

[CountryBeforeParty]

09:09 AM on 07/25/2011

Michele Bachmann is still insisting that this is all made up and nothing will happen if we default.

I guess what we have here is a whole lot of nothing going on.

[Photon55]

08:46 AM on 07/25/2011

One has to wonder why the republicans who ran up our deficit/ debt under Bush/Cheney using failed Reaganomics are so insistent on creating more misery for the American people. They have all but absolved themselves of blame and responsibility for the mess at home and abroad but maintain they have the right plan to save us from their earlier incompetence. The middle election of 2010 will go down as the final nail in the coffin relating to the demise of the American economy. The electorate made a disastrous choice to return them to power after the debacle created during the last republican administration. The voters have no one to blame but themselves and if it all comes crashing down so be it. It has been apparent for some time who is to blame for our current rancor and rage and it is not the president.

[Viper]

08:50 AM on 07/25/2011

Only 41% voted. Repugs can not win an election with more than 53% turnout and its why they work so hard to rig elections and supress voter turnout.

Regards

[sebackpacker]

10:10 AM on 07/25/2011

Yes, the republicans always have the panthers standing at the polls swinging bats. Wait, what..??

[pa30]

08:26 AM on 07/25/2011

Makes you wonder why they deregulated foreign currency derivatives a couple months ago.

[Cornhusker40]

08:25 AM on 07/25/2011

So what you will, they are all "in this together" GOP and DEM. This is probably the last act, one that's been pre-arranged by the puppet masters.
I mean, how much more are you going to let your government get away with?

[CountryBeforeParty]

09:07 AM on 07/25/2011

What you are saying is true. But let's be honest here. The Dems have been offering deals to the Reublicans, everything short of offering first born children. And the Republicans keep saying no.

How much more of the pillars that the country is built on do we have to give away?

[sebackpacker]

10:11 AM on 07/25/2011

The House passed a bill and sent it on. They are not the party of no solutions at the moment.

[IThinkthereforeImLiberal]

08:24 AM on 07/25/2011

Anyone else see the irony in how repubs say government should be run as a business, yet they are against increasing revenues? Wouldn't want to invest in any business they own...

[Viper]

08:48 AM on 07/25/2011

Yes revenues at 14% of GDP is the lowest in 80 years, since the Hoover debacle, down from historical rate of 20% of GDP.

Reagan and bush were at around 16.5% and that level created a ten fold increase in debt with finanical collapse, bailouts and major recessions and only governmnet job growth under them and a doubling of the size of government(replacing the out sourced MFG jobs, with phoney defense spending and boorwing to fund it, since defense produces no sewlfd sustain capital investments of jobs, and this is what IKE warned about the building of an Industrial Militray complex.. which has become red state welfare and thus the constant need of militray action to justiy spending 20 times more than any nation).

Under Obama our FED taxes as a percent of GDP are just 14%. Stimulus plan 40% tax cuts/plus payroll tax holiday.

So our taxes as a percent of GDP are down 30% from when we had a balanced budget.

Corp tax revenue is down from 30% to just 7%, since the BUSH IRS gave permission to route U.S. sales thru offshore P.O Box tax havens,previously called tax evasion, dropping multinationals to tax rates of under 5%. Then there are countries(all other) that export here, sell at cost,show no profit, pay no taxes and get an 18% export rebate back at home and drive MFG away from here who cant compete...so much for Repug free markets

Regards

[ellwood145]

08:24 AM on 07/25/2011

When the SHTF those with the most will loose the most. Start using cash only people.

[Viper]

08:24 AM on 07/25/2011

Well, for 30 years the repugs have not added one MFG job. lost millions...

They finally do some Manufacturing and its just another financial crisis, their 3rd since 1987.

Regards

[ColPash]

08:22 AM on 07/25/2011

Watch stocks today and see what happens, and if the value of your 401K declines, thank John Boehner and Tea Party Republicans, and remember this at election time.

[mwr133]

08:27 AM on 07/25/2011

There are ways to hedge against that risk. I have been heavily invested in silver, gold, and oil for the past year and a half. I guess Glenn Beck was right afterall.

[Viper]

08:53 AM on 07/25/2011

Who will be buying oil or need it for cars that will be parked?

How did it work as hedge in the collapse of 2008, when oil in a few months went from 147 to 35 per BBL...

Very short memory, when 35/bbl today is speculation.

Regards

[ChardinisAngel]

08:54 AM on 07/25/2011

Yeah, because when there's no money left to buy anything, you'll be able to sell it......

Ah, shiiiit. A flaw in your logic.

[pita143]

08:21 AM on 07/25/2011

The Tea Party said that "nothing would happen" they said that the Dems were acting like "Chicken Little"

Well we have just seen the first shot across the Bow the the USA ECONOMY by Wall Street and the others. If this does not wake up the GOP and tell them to raise the Debt Ceiling without any other preconditions and THEN work on spending and budgets I don't know what will.

I am tired of this game with the GOP. It is so very obvious to anyone but the Tr0lls on this site that the GOP is using the Debt Ceilings as a leverage to get everything they want. They don't care about this Country, they don't care about its People and they don't care about what will happen.

They act like a bunch of puppets on a string and the Tea Party is the Puppet Master.

[DNAtsol]

08:17 AM on 07/25/2011

I am starting to become partial to the idea of no deal without revenue increases, let the US default and watching the catastrophe unfold around me. Maybe that would finally remove the R's totally from the picture and we could get some real opposition party.... from the left.

[den1953]

08:13 AM on 07/25/2011

So when do Americans get the green light to have a massive run on their banks that is the next piece of the puzzle, buy gold and watch Wall Street executives jump out of windows, maybe not!!!!!!!