The three major ratings agencies shrugged off this weekâ€™s breakdown in talks aimed at ending the fiscal impasse in Washington by Jan. 1, saying their outlook for Americaâ€™s sovereign debt was already negative and would not immediately change.
But officials of the agencies said they were looking toward another looming fiscal deadline â€” a date sometime in February or early March when the United States government risks running out of cash if Congress cannot find a way to raise its statutory debt ceiling. That date appears to pose more of a threat to the nationâ€™s credit rating than Jan. 1, when a package of onerous tax increases and spending cuts will begin if America goes over what is commonly called the fiscal cliff.
Stock investors appeared on Friday to be more concerned about the economic consequences of raising tax rates than about a downgrade of the nationâ€™s credit.
Stock prices fell around the world after Republican leaders announced Thursday night that they could not summon up enough votes for their own proposal to cut spending and raise taxes for the nationâ€™s most affluent households.
The Standard & Poorâ€™s 500-stock index fell 0.94 percent Friday, or 13.54 points, to 1,430.15. The Nasdaq composite index dropped 0.96 percent, or 29.38 points, to 3,021.01, and the Dow Jones industrial average fell 0.91 percent, or 120.88 points, to 13,190.84.
Stocks had largely risen over the last two weeks as President Obama and House Speaker John A. Boehner inched forward with small concessions.
[Continued at the New York Times]