Wall Street cut its losses to end only moderately lower on Monday, as US benchmarks cut some of their losses while investors awaited for vote in Congress on the debt agreement.

Sunday night saw President Barack Obama announce that an agreement had been reached on how to raise the country's debt ceiling and reduce the deficit. Thus, the greatest risk facing the markets, that of a "debt default" by the US Treasury should be avoided, but judging by market commentary the risk of future debt downgrades has not.

If agreed to by both the Republicans and Democrats, in a vote that is expected to take place either late Monday or early Tuesday, the debt ceiling will rise by at least $2.1tn, with Congress set to reduce the deficit by approximately $2.5tn over the next decade.

In a research note out this morning economists at Barclays have issued a research note in which they indicate to clients that last night's agreement on Capitol Hill represents a 'band aid' approach, and not a "game changing breakthrough". This means that the possibility of a near term downgrade remains. Interestingly, Barclays believes that the issue of a ratings downgrade has been pushed back to late Q4, "by when it will be apparent how successfully the new commission is succeeding in resolving the $1.5tn in deficit cuts, as well as how the triggers might work."

Meanwhile, the ISM manufacturing sector index for the month of July has fallen to 50.9 points, from 54.2 the month before (Consensus: 51.3).

Construction spending rose 0.2% on month in June (Consensus: 0.2%).

The Dow fell 11 to 12,132, the Nasdaq lost 12 points to finish at 2,745, while the S&P 500 dropped 5 to close at 1,287.

Holding company Loews Corp fell lower after reporting earnings per share (EPS) of $0.62 for the second quarter, less than the $0.87 reported a year earlier and the $0.84 expected by the consensus. The company - which has subsidiaries in property and casualty insurance, hotels, and the oil and gas markets - attributed the lower earnings on higher natural catastrophe losses in its CNA Financial Corporation.

US health-benefits provider Humana was out of favour despite closing the second quarter of the year with adjusted earnings per share (EPS) of $2.50, more than the $2.05 expected by the consensus. The group also raised its annual EPS guidance to the range of $7.50 - $7.60, compared to the previous estimate of $6.70 - $6.90.

Insurance firm Allstate Corp rose after its second quarter loss was less than expected.

BC

S&P 500 - Risers
Nvidia Corp. (NVDA) $14.50 +4.86%
Abercrombie & Fitch Co. (ANF) $75.28 +2.95%
American Electric Power Co. Inc. (AEP) $37.85 +2.69%

S&P 500 - Fallers
Health Care REIT Inc. (HCN) $48.31 -8.47%
HCP Inc. (HCP) $34.64 -5.69%
Staples Inc. (SPLS) $15.28 -4.86%

Dow Jones I.A - Risers
Caterpillar Inc. (CAT) $100.72 +1.95%
Verizon Communications Inc. (VZ) $35.87 +1.64%
Chevron Corp. (CVX) $105.38 +1.31%

Dow Jones I.A - Fallers
Merck & Co. Inc. (MRK) $33.44 -2.02%
Home Depot Inc. (HD) $34.25 -1.95%
Cisco Systems Inc. (CSCO) $15.78 -1.19%

Nasdaq 100 - Risers
Nvidia Corp. (NVDA) $14.50 +4.86%
Infosys Technologies Ltd. (INFY) $63.23 +1.63%
Apple Inc. (AAPL) $396.77 +1.61%

Nasdaq 100 - Fallers
Teva Pharmaceutical Industries Ltd. ADS (TEVA) $43.76 -6.19%
Warner Chilcott Plc (WCRX) $19.95 -5.08%
Staples Inc. (SPLS) $15.28 -4.86%

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