US stocks fall amid debt clash

US stocks dropped as markets opened after US President Barack Obama and his Republican foes clashed again over the debt ceiling, dimming hopes of a timely resolution to the standoff. The Dow Jones Industrial Average was down 73.30 points (0.58 per cent) at 12,519.50 after the first half-hour of trading overnight. The broader S&P 500 fell 6.02 points (0.45 per cent) to 1331.41, while the tech-heavy Nasdaq Composite slipped 4.40 points (0.15 per cent) to stand at 2838.40. Yesterday, Mr Obama warned of a "deep economic crisis" if congress failed to raise the US government's $US14.29 trillion ($13.21 trillion) debt ceiling by August 2, while Republicans continued to reject his demand to raise taxes. "The market is still holding out hope that a compromise can be reached," said Patrick O'Hare, an analyst with Briefing.com. "Confidence has been shaken a bit in recent days, however, so no one is making any concerted bets at this juncture." Start of sidebar. Skip to end of sidebar. End of sidebar. Return to start of sidebar. The risks of a US government default or a ratings-agency downgrade of US debt have been hanging over the market in recent days, overshadowing companies' second-quarter earnings reports, many of which have been positive. Shares of Ford rose 0.4 per cent in early trading overnight after the carmaker reported its ninth consecutive quarterly profit, despite higher commodity costs that cut into its earnings. UPS sank 4.4 per cent even though the delivery giant slightly beat analysts' expectations, with second-quarter earnings coming in at $US1.05 per share, compared to the consensus forecast of $US1.04. Netflix, the online film-delivery service which has been a darling of the stock market in recent weeks, plunged 10.2 per cent after it said yesterday that its revenues fell short of expectations and cut its forecasts for US subscriber growth. The depressed US housing market also weighed on investors' mood after the release of the S&P/Case-Shiller Home Price Index, a closely watched gauge of housing. The index for 20 leading cities showed that home prices had not budged from April to May, on a seasonally adjusted basis, and were still 4.5 per cent lower from a year ago. Bond prices rose slightly despite the standoff in Washington, which has raised questions about the wisdom of holding US government debt. The yield on the 10-year Treasury fell to 2.99 per cent from 3.00 per cent yesterday, while the 30-year bond dropped to 4.31 per cent from 4.32 per cent. Bond prices and yields move in opposite directions.