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Wall Street Fears Debt Negotiation Deadlock

By Lemuel Cacho  

Wall Street investors are still worried over the debt ceiling after attempts to strike a deal between the White House and the United States (US) Congress failed to agree to raise the debt ceiling.

The deadline to pay off debts is only nine days away with US borrowing limit of US$14.3 trillion. The White House and Republican leaders reassured global markets that the US would not allow a debt default but positive developments have yet to transpire.

Wall Street is about to close its worst performing three months in a year after weeks of ups and downs for markets this July.

The corner of Wall Street and Broadway, showing the limestone facade of w:One Wall Street in the background. Photo Credit: WikiMedia Commons

Investors are keen in observing what is going to happen in the following days especially now that euro zone leaders will again bailout Greece for its debts. Investors worry that debt default would increase more uncertainty considering the events in Europe and growth expectations are weakening.

Also, corporate earnings are suggesting that markets will experience additional strains despite relatively good results. A 3.8 percent of the S&P 500 has outpaced the consensus estimates while only 7 percent have missed estimates, according to data from Morgan Stanley. There was a 6 percent rally by S&P500 as corporate earnings reporting runs up, but earnings from industrial giants weighed on the Dow Jones last Friday.

Market skepticism looms as share prices of those that fell short of the estimates are taking a beating. The market is apparently punishing those who have missed the estimates more than it is rewarding the beats. Companies such a Pepsi and Whirlpool are worried that a sluggish market will send their shares lower. Market experts are forecasting that this trend will continue.

Lemuel Cacho is a versatile writer specializing in business, technology and science. Contact Lem through NewsBlaze.