July 25 - Stock prices fell, bond yields rose and gold hit a record high, but the market's response to the threat of a U.S. default or credit downgrade was not as severe as feared. Conway G. Gittens reports.
PLEASE NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL Wall Street's patience with Washington on getting a debt deal done appears to be starting to wear thin, explains Sam Stovall of Standard & Poor's. SOUNDBITE: SAM STOVALL, CHIEF INVESTMENT STRATEGIST, STANDARD & POOR'S (ENGLISH) SAYING: "So I think right now most investors still believe that Congress will approve some sort of 11th hour deal, but the closer we get to the deadline the less confident Wall Street is that it will be a good deal." The stock market finished the day with a modest decline, defying expectations of a major market sell-off, sending a message - investors are nervous, but willing to wait. REPORTER: CONWAY G. GITTENS (ENGLISH) SAYING: "You know markets, when ready, can send a clear signal to lawmakers in Washington. When the stimulus package under President Obama didn't pass the first time, stock markets fell like a stone, days later when the vote came up again - that time it passed." U.S. Treasuries also finished off the lows of the day as some question whether August 2 is an absolute deadline for America to stop paying its bills. Ward McCarthy of Jefferies: SOUNDBITE: WARD MCCARTHY, CHIEF FINANCIAL ECONOMIST, JEFFERIES (ENGLISH) SAYING: "The next I think big risk for the possibility of a default, actually is August 15th because that's when the Treasury has most maturing issues that need to be redeemed and also has to make the mid-quarter coupon interest payment and I think there is some wiggle room there as well." Another thing? Some investors are not yet as worried about the impact if the U.S. loses its stellar triple-A credit rating. Wall Street veteran James Maguire Jr. of Native One Institutional Trading: SOUNDBITE: JAMES MAGUIRE JR., MANAGING MEMBER, NATIVE ONE INSTITUTIONAL TRADING (ENGLISH) SAYING: "I don't think it is going to have as great an impact as some people may fear. And simply stated: the United States is still the place that people want to be. The United States is a global leader and that is not going to change. Relative to the rest of the world this is a place where people want to invest." But not all investors were willing to brush off the risk a deal won't get done in time. Gold hit a record high above $1,620 an ounce. Conway Gittens, Reuters