Credit downgrade possible even if debt ceiling agreement reached
According to TheStreet, Wall Street is preparing for a credit downgrade for the U.S. even if the debt ceiling is increased. Analysts from the largest Wall Street banks warned that if the cuts aren't credible, the ratings agencies will still downgrade the U.S. credit rating. Economist Steve Weiting from Citigroup believes that a ratings downgrade will come as soon as the agreement is reached. It is predicted by Bloomberg that Standard & Poor's will downgrade the credit rating from AAA to D and Moody's will downgrade the rating from Aaa to Aa.
Stocks down 84 points on Monday.
The Dow closed at 12,592 falling 88 points. The Dow was down 145 points at one point on Monday but recovered somewhat. Gold also reached a record at $1,624.30/ ounce. Gold futures are up 8.7%.
More questions on European financial security
Greek debt was downgraded to the lowest possible rating with the belief that a government default is a certainty with the debt ultimately being refinanced through various means. Yields climbed on the bonds of other challenged Euro zone countries on Monday, indicating that investors were not happy with the agreement reached last week. According to the Wall Street Journal, rates on Spain's bonds were over 6% on Monday with Italy also seeing increased rates. The IMF stated that both Italy and Spain are "resilient."
Blackberry cuts 2000 jobs
Blackberry maker, Research in Motion, will be cutting 2,000 jobs this week. RIM has been slow in adopting newer technology, according to the Associated Press. While Apple sold 20.3 million iPhones in the spring, Blackberry sold only 13.2 million units in a similar period.
Treasury to sell fewer bonds anticipating default
The U.S. Treasury will auction $18 billion of bonds on Tuesday, down 36% from the $28 billion of bonds sold each week since May. The lower amounts are said to be in anticipation of a potential default.
Consumers worried about debt
An Associated Press-Gfk survey indicates that one in five Americans worry about debt most or all of the time. More than one out of three will not pay off debts they incurred in the past month. The survey indicates that 40 million Americans are feeling serious stress about the economy.