Stocks Slip As Debt Ceiling Comes Into Focus

stock market plunge

NEW YORK (CNNMoney) – U.S. stocks opened lower Monday, as investors remain focused on Washington and await corporate results later this week.

The Dow Jones Industrial average, the S&P 500 and the Nasdaq were all down about 0.5%.

International banks won a concession Sunday from the Basel Committee on Banking Supervision, which relaxed rules for lenders that had been proposed in hopes of preventing another global financial crisis. U.S.-listed shares of Deutsche Bank and UBS were higher.

Shares of Bank of America rose after it announced a $10.3 billion settlement with Fannie Mae to resolve current and future repurchase claims on loans that were originated before December 31, 2008.

U.S. stocks rallied in the first week of 2013, with the S&P 500 ending Friday at its highest level since December 2007.

Investors welcomed a compromise deal on the fiscal cliff, but lawmakers delayed many of the most contentious decisions on spending cuts. Officials in Washington are now gearing up for a fight over the debt ceiling.

If the nation’s borrowing limit isn’t raised by late February or early March, the United States runs the risk of defaulting on its obligations because the Treasury would no longer have enough money available to pay all the country’s bills.

“The debt ceiling is the new wall of worry for stocks,” said Anthony Conroy, head trader at BNY ConvergEx Group.

Meanwhile, aluminum producer Alcoa will be the first major firm to report fourth-quarter earnings after the closing bell Tuesday. Wells Fargo will release its results Friday.

Fear & Greed Index

European markets were narrowly weaker in afternoon trading but found support from gains in the banking sector, while Asian markets ended mixed. The Shanghai Composite added 0.4%, while Hong Kong’s Hang Seng advanced 0.1%. Japan’s Nikkei dropped 0.8%, despite media reports indicating the government is preparing a fiscal stimulus package.

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