US stocks fall as debt deadline looms

US stock index futures sank on Monday.

US stock index futures fell on Monday after the last ongoing talks to avert US default broke up on Sunday evening without resolution.

Investors are increasingly nervous that US politicians would not reach a deal in time.

The US must raise its current $16.7 trillion debt ceiling by October 17 or face a default for the first time in history.

Rising tensions between Republicans and Democrats in Congress have led the talks to an impasse. The two sides have so far failed to conclude an agreement to reopen the federal government, which partially closed down since the start of October, and raise the limit on federal borrowing authority.

According to Reuters, S&P 500 futures dropped 11.3 points and were below fair value on Monday, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures lost 97 points and Nasdaq 100 futures fell 12.75 points, Reuters said.

Ahead of the weekend, US stocks rose strongly on hopes a deal was near. However, failure to raise the debt ceiling would leave the American economy unable to pay its bills in the coming days.

Speaking in Washington, International Monetary Fund managing Director Christine Lagarde warned of “massive disruption” to the global economy if the US debt ceiling was not increased by members of Congress.

Many experts in America are doubtful if lawmakers reach a deal on time. David Plouffe, formerly Obama’s senior political adviser, said on Sunday the prospect of a deal before Thursday is “no better than 50/50”.

“The country needs to prepare that this will go on for a while,” Plouffe told ABC. He said that the best hope of a deal now would be when “the markets say something very loud when they open tomorrow (Monday).”

ARA/ARA

Copyright: Press TV