Stock index futures pointed to a mixed opening on Wall Street on Wednesday, with futures for the S&P 500 up 0.1 percent, Dow Jones futures up 0.1 percent and Nasdaq 100 futures down 0.13 percent at 0940 GMT.
A Republican plan to cut the U.S. deficit faced delay and stiff opposition on Wednesday, piling anxiety onto investors and ordinary Americans hoping for a late compromise to avoid a crippling debt default.
Even if a default is avoided, a plan that flinches from hefty deficit cuts could result in a downgrade of the country's triple-A rating that would raise its borrowing costs and deal a severe blow to its sluggish economic recovery.
According to a Reuters poll, the United States will lose its top-notch AAA credit rating from at least one major rating agency. A small majority of economists -- 30 out of 53 -- surveyed over the past two days said the United States will lose its AAA credit rating from one of the three big ratings agencies -- Standard & Poor's, Moody's or Fitch.
Credit Suisse strategists say under their central scenario there is a 50 percent chance of a credit ratings downgrade on U.S. debt, even if the debt ceiling is raised, as they expect key decisions on fiscal tightening to be delayed until after the 2012 elections.
Japan's Nikkei stock average <.N225> lost 0.5 percent while European stocks fell in morning trade, led lower by banking stocks such as Societe Generale
Gold prices hit a 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 record high on Wednesday according to data monitor Markit. One-year U.S. credit default swaps rose to a record high 85 basis points, up 8 basis points on the day. Earlier Markit said five-year CDS was up by 3 bps at 62 bps. The inversion of the CDS curve showed the risks of a default are seen greater in the near term.
LG Electronics' <066570.KS> quarterly profits jumped 25 percent after it more than halved losses from its ailing mobile phone division and its television unit returned to a small profit, sending its shares nearly 4 percent higher.
Investors awaited a flurry of earnings reports on Wednesday, from companies including Boeing Co
On the macro front, the market awaited June durable goods orders. Economists in a Reuters survey expect 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 showed investors remained reluctant to make bets despite another round of healthy earnings.
At the close, the Dow Jones industrial average <.DJI> was down 91.50 points, or 0.73 percent, at 12,501.30. The Standard & Poor's 500 Index <.SPX> was down 5.49 points, or 0.41 percent, at 1,331.94. The Nasdaq Composite Index <.IXIC> was down 2.84 points, or 0.10 percent, at 2,839.96.
The CBOE Volatility Index <.VIX>, Wall Street's gauge of investor anxiety, rose 4.6 percent and broke above a 20 reading.
(Reporting by Blaise Robinson in Paris; Editing by Greg Mahlich)