Stocks Whipsawed as Congress Plays Chicken
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Stocks bounced in and out of positive territory Tuesday as Congress continues to bicker over the debt ceiling with only hours left until the October 17 deadline.
Investors were optimistic to start the session after traction was being seen in the Senate with a deal at hand. However, House Republicans threw cold water on this notion after Speaker of the House John Boehner said the Republican House will take up their own plan.
In fact, this afternoon Senate negotiations were suspended as they wait for the House plan.
The Senate deal is expected to include: (1) a continuing resolution which would reopen the federal government through mid-January; (2) an extension of the debt ceiling to at least early February; and (3) the inclusion of a mechanism for expedited consideration of a budget resolution through a conference committee.
Meanwhile, the expected House bill includes the same time-frame for reopening the federal government and extending the debt ceiling, but adds Vitter language that seeks to eliminate health care benefits for congressional staff and lawmakers and includes a two-year medical device tax repeal.
While October 17 is seen as an important date, estimates see a little more breathing room. The CBO and BPC estimate the first day the U.S. Treasury could be unable to pay the entirety of its obligations could come between October 22 and 31.
Senate Majority Leader Harry Reid (D) said credit rating agency downgrades could be forthcoming given the impasse.
After starting the day lower, then moving into positive territory, the Dow now sits down 82 points. The S&P 500 is down 7 and the Nasdaq is down 12.
Investors were optimistic to start the session after traction was being seen in the Senate with a deal at hand. However, House Republicans threw cold water on this notion after Speaker of the House John Boehner said the Republican House will take up their own plan.
In fact, this afternoon Senate negotiations were suspended as they wait for the House plan.
The Senate deal is expected to include: (1) a continuing resolution which would reopen the federal government through mid-January; (2) an extension of the debt ceiling to at least early February; and (3) the inclusion of a mechanism for expedited consideration of a budget resolution through a conference committee.
Meanwhile, the expected House bill includes the same time-frame for reopening the federal government and extending the debt ceiling, but adds Vitter language that seeks to eliminate health care benefits for congressional staff and lawmakers and includes a two-year medical device tax repeal.
While October 17 is seen as an important date, estimates see a little more breathing room. The CBO and BPC estimate the first day the U.S. Treasury could be unable to pay the entirety of its obligations could come between October 22 and 31.
Senate Majority Leader Harry Reid (D) said credit rating agency downgrades could be forthcoming given the impasse.
After starting the day lower, then moving into positive territory, the Dow now sits down 82 points. The S&P 500 is down 7 and the Nasdaq is down 12.
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