Here's an overview of how various markets are reacting to the impasse in Washington over raising the U.S. borrowing limit. The U.S. government could default on its debt after Aug. 2 if the limit isn't raised.
_ Stocks: On Wednesday the Dow lost 198.75 points, or 1.6 percent, to close at 12,302.55, its fourth straight day of losses. Small company stocks fell harder: The Russell 2000 lost 2.95 percent. Worries about a possible U.S. debt default have been weighing on the market this week. Stocks are seen as riskier than other assets and investors sell when they are worried or uncertain about the economy, among other things. A Federal Reserve survey showing slower economic growth added to the slide on Wednesday.
_ U.S. Government Bonds: The yield on the 10-year Treasury note edged up to 2.97 percent on Wednesday from 2.95 percent late Tuesday. The 10-year note is the main Treasury to watch; its yield is a benchmark for rates on mortgages and other kinds of loans throughout the economy. How will you know if big investors like China lose faith in the U.S. government? Bond yields will leap. The market has remained calm so far with just six days until Aug. 2.
_ Gold: On Wednesday, gold dropped $1.70 to settle at $1,615.10 an ounce. Investors are piling into gold on fears of a U.S. default. Unlike many other metals, including silver and copper, there are few commercial uses for gold but it's seen as an asset that is likely to hold its value. That makes it difficult to gauge just how much it's really worth. When gold prices are high, experts say it's a good indicator that people are scared to invest money in other markets. Gold closed above $1,600 an ounce for the first time on July 18. At the beginning of the year, it was $1,422.
_ Currencies: On Wednesday, the dollar rose slightly against an index of major currencies. But it also sank to a four-month low against the Japanese yen, a record low against the Swiss franc and a nearly 28-year low versus the Australian dollar. When money managers are concerned about the value of the U.S. dollar, they sometimes buy currencies issued by countries that have been more prudent with spending. The bet is that as the U.S. struggles to pay its debts, more investors will put money in these currencies, lifting their value. Singapore dollars, Canadian dollars, Brazilian reals and Australian dollars are among those that investors are buying.