Monday, July 25, 2011

Dow Jones

Dow Jones Industrial Average futures fell 114 points--nearly one percent--Sunday night as U.S. lawmakers failed to reach an agreement to raise the $14.3 trillion debt ceiling. Standard and Poors futures also fell by 0.9 percent in electronic trade, MarketWatch reports.
The report follows a Sunday night meeting between President Barack Obama and congressional leaders Nancy Pelosi and Harry Reid. According to the White House, Pelosi and Reid briefed the president on the state of negotiations in Congress, while all three Democrats reiterated their opposition to a short-term debt limit increase.
“Gang of Six” member Tom Coburn told NBC that such opposition by the president is “ridiculous” because “that’s what he’s going to get presented with.”
House Speaker John Boehner also told Republicans Sunday that a plan he was working on was “going to require some of you to make sacrifices. The plan would be different from the “Cut, Cap and Balance” legislation that was killed in the Senate last week after passing the House.
With all of the uncertainty attached to the potential deal, markets reacted negatively. In addition to the Dow’s dip, Asian stock markets also traded lower in fear of a U.S. default.
By contrast, Forbes reports that the Dow could be heading toward 13,000 this summer if a debt deal is reached and companies continue to report solid earnings.
“[The Dow] could rise if the debt situation is worked out, energy prices remain around $100 or below, and the mid-cycle slowdown begins to end,” said Martin Schulz of PNC Capital Advisors.