U.S. stocks retreated Tuesday due to the outlook for corporate earnings and ongoing worries over the U.S. debt ceiling shook investor confidence.
Investors have been torn between two forces: Second-quarter corporate results that have been generally positive and Concerns tied to the continuing battle over the United States’ debt ceiling. Of the S&P 500 companies that have reported their quarterly results so far, 73% have beaten expectations, according to data by Thomson Reuters.
Months of increasingly tense negotiations have failed to bring a deal that can win approval from all of the necessary players — the Republican-led House, Democratic-led Senate and the White House. If Congress doesn’t raise the $14.3 trillion debt limit by next week, Americans could face rising interest rates and a declining dollar, among other problems. But investors continue to call Washington’s bluff, and are optimistic a deal will be reached before the August 2 deadline.