Stocks were slightly lower on Wednesday as concerns over a possible debt default by the United States continued to weigh on investor sentiment.
A Republican plan to cut the U.S. deficit stiff opposition, piling anxiety onto investors and ordinary Americans hoping the government would not default on its debt obligations.
Even if a default is avoided, a plan that flinches from hefty deficit cuts could result in a downgrade of the U.S. government's triple-A rating and raise borrowing costs, dealing a severe blow to the economic recovery.
Credit Suisse strategists see a 50 percent chance of a credit ratings downgrade on U.S. debt, even if the ceiling is raised as key decisions on fiscal tightening are delayed until after the 2012 elections.
The market is poised to move higher, considering how the earnings have been coming in, but investors are being held back from risk (trade) because of all these headlines out of Washington, said Mark Luschini, chief investment strategist at Janney Montgomery Scott in Philadelphia.
S&P 500 futures fell 2.9 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures were down 7 points, and Nasdaq 100 futures dipped 6.5 points.
Financial stocks were in focus after European banks such as Societe General
Gold prices hit another record high at more than $1,623 an ounce, while the cost of insuring U.S. debt against a default in the next year hit a new high, according to data monitor Markit.
Dunkin' Brands Group Inc
Dow Chemical Co
On the macroeconomic front, the market waited for June durable goods orders. Economists in a Reuters survey saw a rise in orders of 0.3 percent versus a 2.1 percent increase in May.
The stalemate in U.S. debt talks dragged down stocks for a second day on Tuesday, and light volume indicated that investors were reluctant to make bets despite another round of healthy earnings.
(Reporting by Angela Moon; editing by Jeffrey Benkoe)