The Fitch credit rating agency has warned that it is reviewing the US government's AAA credit rating for a possible downgrade, citing the impasse in Washington that has raised the threat of a default on the nation's debt.
Fitch placed the US credit rating on negative watch Tuesday, a step that would precede an actual downgrade. The agency said it expects to conclude its review within six months.
The announcement comes as House and Senate leaders face a Thursday deadline to raise the nation's US$16.7 trillion borrowing limit. Fitch says it expects the debt limit to be raised soon. But it adds, "The political brinkmanship and reduced financing flexibility could increase the risk of a US default."
On Wall Street, the Dow Jones industrial average fell 133 points after rising a day earlier when optimism spread that a deal might be at hand.
Meanwhile, House Republican efforts to pass legislation averting a Treasury default and ending a partial government shutdown collapsed Tuesday night.
The decision by Speaker John Boehner and the GOP leadership to pull a bill they had unveiled earlier in the day, appeared to mark the end of what amounted to a daylong detour from separate negotiations in the Senate, that had appeared on the verge of bearing fruit.