Stocks and commodities fell on Monday as weak global factory data added to already sour news on the global economy, along with concern lawmakers in Washington may not approve a rise in the U.S. debt ceiling in time, according to Reuters. The Swiss franc soared and the U.S. dollar rallied against the euro, with demand for safe-haven currencies set to continue on concerns about a slowing economy and a possible cut of the United States' triple-A credit rating. U.S. stocks swung from a 1 percent gain at the open to a 1 percent slide before paring some losses, reflecting the market's uncertainty, after the Institute for Supply Management's July manufacturing index hit its lowest in two years. The slow pace of growth cast doubt on expectations the faltering recovery would quickly regain steam in the second half of the year. Data also pointed to stagnant factory growth in China and the euro zone. U.S. oil prices fell 0.6 percent while copper dropped 1.5 percent on the weak ISM data and a firmer dollar. U.S. congressional leaders rushed to line up Republican and Democratic votes for a White House-backed deal to raise the U.S. borrowing limit and avert an unprecedented debt default. No time for a vote has been announced, but Vice President Joe Biden predicted passage. The non-partisan Congressional Budget Office confirmed that the debt deal would reduce budget deficits by at least $2.1 trillion over 10 years. The deal "doesn't help the economy, and if we have a continued slowdown the deficit will be larger," said Carl Kaufman, who helps manage nearly $2 billion at the Osterweis Strategic Income fund in San Francisco. "Add to that the fact that it isn't a certainty this goes through, and it's not a certainty we won't get downgraded." With less than an hour of trading left in the session, the Dow Jones industrial average was down 24.67 points, or 0.20 percent, at 12,118.57. The Standard & Poor's 500 Index was down 6.32 points, or 0.49 percent, at 1,285.96. The Nasdaq Composite Index was down 18.88 points, or 0.68 percent, at 2,737.50. World stocks as measured by MSCI fell 0.5 percent with emerging market shares up 0.9 percent. U.S. dollar-denominated Nikkei futures dipped 0.15 percent. The plan to avert a U.S. default must be passed by both houses of Congress and will still face some opposition. The Treasury faces a Tuesday deadline after which it would have to stop paying some of its bills. There remained widespread assumption that ratings agencies could downgrade U.S. Treasuries from their vaunted triple-A status, a move that would impact the valuation of numerous other assets. "The risk of a possible credit downgrade remains on the table as the spending cuts may not go far enough to convince rating agencies that Washington is serious about getting its fiscal house in order," said Omer Esiner, chief market analyst at Commonwealth Foreign Exchange in Washington. Still, the cost of insuring U.S. debt with credit default swaps fell. SWISS FRANC RALLIES, EURO SLIDES The dollar and euro hit record lows against the Swiss franc, while the single currency lost 0.7 percent versus the greenback. Against the yen, the U.S. currency was last down 0.4 percent at 77.08 after earlier hitting a more-than-4-month low that heightened fears of intervention from Tokyo. "The markets are unsure about how this will play out and it is down to the wire, so the market is cautious right now," said Jessica Hoversen, FX analyst at MF Global in New York. Gold futures edged 0.5 percent lower to $1,620.70 an ounce. In bond markets, benchmark U.S. Treasuries rose 14/32 in price to yield 2.74 percent after the weak data, down from 2.82 percent earlier Monday and 2.80 percent late on Friday.
