Futures tumbled Monday as talks to raise the debt ceiling hit another stalemate and the threat of a U.S. rating downgrade and potential defaultintensified.
A divided U.S. Congress pursued rival budget plans on Sunday that appeared unlikely to win broad support, and although many analysts still expect a last-minute deal, uncertainty surrounding the talks pushed stocks lower and gold higher on Monday.
Analysts are increasingly worried that the stalemate will cause rating agencies to cut their stance on U.S. debt.
An actual downgrade, this onefor Greece by Moody's, also weighed on sentiment.
The ratings agency cut its rating on Greece’s sovereign debt by three notches to "Ca," just one notch above default.
The downgrade means Greece now has the lowest rating of any country in the world covered by Moody's, Reuters said.
Among earnings, Kimberly-Clark declined after the Kleenex maker said 2011 earnings might come in toward the lower end of its forecast, even as the company beat earnings expectations.
Baker Hughes also fell even after the oilfield services company posted better-than-expected earnings, driven by strong U.S. drilling activity and rising profit margins outside North America.
Texas Instruments and Netflix are slated to report earnings after the bell.
On the tech front, Research In Motion slipped after the BlackBerry maker annouced it is cutting 2,000 jobs as part of a cost savings plan.
United Technologies is also in focus, with the Wall Street Journal reporting the company is considering a partial sale or other strategic option for its rocket-engine business.
There are no major macroeconomic data due Monday.
On Tap Next Week:
MONDAY: Dallas Fed survey, USDA food prices outlook; Earnings from Texas Instruments, Broadcom, Netflix
TUESDAY: S&P Case-Shiller home price index, consumer confidence, new home sales, Richmond Fed survey, 2-yr note auction; Earnings from BP, Deutsche Bank, Ford, GlaxoSmithKline, 3M, UBS, UPS, US Steel, Amazon.com, Electronic Arts
WEDNESDAY: Weekly mortgage apps, durable goods orders, oil inventories, 5-yr note auction, Beige Book; Earnings from Boeing, ConocoPhillips, Aetna, AutoNation, Delta, Dow Chemical, Aflac, Symantec, Visa, WholeFoods
THURSDAY: Weekly jobless claims, pending home sales, Kansas City Fed survey, Richmond Fed Lacker speaks, 7-yr note auction, San Francisco Fed Williams speaks, money supply; Earnings from AstraZeneca, Credit Suisse, DuPont, ExxonMobil, Royal Dutch Shell, Sanofi, Bristol-Myers Squibb, DR Horton, Kellogg, Motorola Solutions, Sprint, Time Warner Cable, Chesapeake Energy, MetLife, Motorola Mobility, Starbucks
FRIDAY: Employment cost index, GDP, Chicago PMI, consumer sentiment, farm prices; Earnings from Chevron, Merck
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