9:55 AM New York – World markets remained optimistic as the U.S. neared debt default date on Thursday. Senate plan only funds the government for three more months and crisis is expected to reappear in late January. Rating agencies are still quiet on the U.S. sovereign outlook.
Stocks opened lower on Wall Street and politicians focus on a short term plan in the Senate.
The S&P 500 index declined 0.4% to 1,703.29 and the Nasdaq Composite Index fell 6.29 to 3,808.98.
Three large rating agencies, Standard & Poor’s, Moody’s and Fitch Ratings have been quiet on the U.S. debt outlook.
Three rating agencies were quick to downgrade debts of Spain, France, Italy and Greece in the making of the euro crisis but have been quiet as the U.S. lurches from one crisis to the next.
Senators Focus on Short Term Plan
U.S. senators are said to near an agreement that will only push the crisis by three months with three more deadlines along the way.
Senate plan calls for reopening the government and funding the government till mid-January and lifting the debt ceiling till the first week in February, according to sources in the U.S. Senate.
The plan will only postpone the crisis by three more months and not solve the root cause of the current government shutdown and it will still need the approval from U.S. House of Representatives and the White House.
U.S. Congress has the spending authority and the executive branch spends the money and the treasury issues bonds to cover the shortfall. Currently the U.S. government revenues only cover 65% of its spending and the rest is funded by the borrowing.
European markets advanced for the second day this week after investor confidence increased for the third month in October.
The index of German investor and analyst expectations increased to 52.8 in October from 49.6 in September, said the ZEW Center for European Economic Research in Mannheim, Germany.
In London, FTSE 100 index increased 0.8% to 6,558, in Paris CAC 40 index gained 0.7% to 4,251 and in Frankfurt DAX 30 index jumped 0.65% to 8,788. In Switzerland the SMI index added 1%.
U.S. Stocks in Review
Coca-Cola Company (KO
) gained 1% to $38.32 after the world’s largest beverage maker said third-quarter profit increased on higher sales volumes in North America.
) declined 1% after the third largest bank reported a lower than expected $3.23 billion profit on lower than expected U.S. mortgage revenues. Bond trading revenues declined 26%.
Johnson & Johnson (JNJ
) added 1% to $90.43 after the health care products maker reported better than expected earnings and lifted its full-year outlook.
) gained in the early trading after Jeffries lifted its view on the stock to “buy” from “hold” and raised its target price to $42 from $33.
) plunged 17% to $43.97 after the maker of storage systems estimated adjusted earnings per share between 60 cents and 70 cents a share and lowered its full-year outlook to a range of $2.70 and $2.80 a share.