Summary Box: Investors prep for possible default

AP News
Posted: Jul 18, 2011 3:25 PM
Summary Box: Investors prep for possible default

THE CONCERN: The U.S. government risks defaulting on its debt if lawmakers fail to reach an agreement to raise the government's borrowing limit by Aug. 2. That in turn could cause interest rate spikes and a stock sell off.

THE IMPACT SO FAR: The reaction has been muted. The Dow Jones industrial average closed at 12,479 last week, about where it stood at the start of the month. In the bond market, the yield on the 10-year Treasury note stood at 2.89 percent Monday. It was 3.74 percent in Feburary, when almost no one was talking about the debt limit.

A COURSE OF ACTION: Investors shouldn't panic and make any big changes to their long-term strategies. Still, the debt crisis should serve as an important reminder that it's never a bad idea to regularly take stock of your portfolio.