Wall Street falls as a debt default day edges closer

The relatively relaxed attitude Wall Street has taken so far in the talks that began two months ago is now replaced with anxiety growing with the approach of the deadline August 2 Photo: AP

With no sign of progress in the round of talks parallel debt to the Capitol, investors moved quickly to reduce their exposure to shares in what is shaping up to a heavy it four trading days. The & S P 500 fell 10.66-0. 81pc - 1,305.48, while the Dow Jones Industrial Average fell 92,34-0. 74pc - to 12,387.39.

Despite a sweep of the largest companies in America, including Coca-Cola, Apple and Goldman Sachs, reports of results this week Wall Street is now riveted on the negotiations aims to raise the ceiling of the debt of $ 14.3 billion (8.9 billion to £) America.

Markets "continue to have saw long Exchange as new macro continue to confuse and concern investors", said Mary Ann Bartels, a strategist at Bank of America, Merrill Lynch. "Investors are naturally maintain a low profile."

The relatively relaxed attitude that Wall Street has taken so far in the talks that began two months ago is now replaced by concern at the approach of the date limit growing August 2. U.S. Secretary of the Treasury Tim Geithner has warned that if the ceiling of the debt - or requirement of the country the legal loan - was not raised in two weeks and then the Government has more will be able to pay all his bills.

With some politicians in Congress by minimizing the importance of a temporary default on its debts, Monday rating agency Fitch said that risks of losing America's precious AAA credit rating for the first time in its history. "Agreement on a credible fiscal consolidation strategy will secure the status of"AAA"U.S.," said Fitch. "Not inevitably undermine the sovereign credit profile." The warning echoed those made by Standard & Poor and Moody last week.

On Wall Street, it was the banks, the first victims of the losses. Shares of Bank of America, the countries largest lender collapsed 2. 8pc, while the shares of Citigroup fell to 1. FP7. The new, Friday evening, that eight banks were not new trials of stress by financial regulators of the already shaken nerves frayed continent.

The President Barack Obama and the Republicans and Democrats in Congress are in the paradoxical situation to try to reach a long-term agreement on the reduction of the deficit as a condition for the lifting of its debt ceiling.

After winning control of House of representatives during the elections last November, Republicans insist spending reduction must bear the burden.

The White House and the Democrats are adamant that the closure of tax for companies and the richest in America must be part of the agreement.

While the S & P and the Dow Jones was cast, prize of the American Government bonds rose Monday as investors relies still on them as a refuge for the debt crisis deepening of Europe.

The yield, which moves in the opposite direction to bond prices, dropped to 2 89pc, near its lowest level this year.

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