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NEW YORK (AP) — Stock futures fell Monday after congressional
leaders failed to agree on a deal to raise the nation’s debt
limit.
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Lawmakers hoped to reach a compromise late Sunday, but those talks
stalled. President Barack Obama wants to raise revenues by letting
tax cuts for wealthy Americans expire. Republicans have pushed for
more spending cuts and have rejected higher taxes.
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If an agreement is not reached, the U.S. is at risk of defaulting
on its debt after Aug. 2. That could have a catastrophic impact on
the global financial markets. The U.S. would likely lose its
coveted triple-A credit rating. Interest rates would rise for
millions of consumers. And stocks could fall the way they did
during the 2008 financial crisis, analysts say.
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Most investors still think that scenario is a long way off. The
White House and Capitol Hill are expected to come up with a
last-minute deal to raise the $14.3 trillion borrowing limit. But,
even so, there are uncertainties over the possibility for higher
taxes and spending changes that could affect corporate
profits.
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Ahead of the opening bell, Dow Jones industrial average futures are
down 84 points, or 0.7 percent, at 12,537. Standard & Poor’s
500 futures are down 10, or 0.7 percent, at 1,331. Nasdaq 100
futures are down 13, or 0.6 percent, at 2,415.
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Bond prices are falling, pushing yields higher. The yield on the
10-year Treasury note rose to 3.02 percent from 2.96 percent late
Friday.
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Gold and silver prices edged up as investors looked for relatively
safe places to put their money. Gold rose $13 to $1,614.50 an
ounce, while silver rose 34 cents to $40.48 an ounce. Gold has
risen 14 percent this year, while silver is up 31
percent.
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European stocks were little changed even after Moody’s further
downgraded Greece’s bond ratings. The credit ratings agency warned
that it is almost inevitable the country will default on its debts
following a new bailout plan approved by European leaders last
week.
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In corporate news, Kimberly-Clark fell 1 percent after the maker of
Kleenex tissues and Huggies diapers said its second-quarter profit
fell by 18 percent as a result of higher prices for its raw
materials and an increased tax rate.
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