Goldman Sachs shares are also dragging the Dow down, dropping 2.6% after third-quarter results missed forecasts.

Goldman and IBM (-6.5%), along with United Health (-3.3%), are basically responsible for the entire triple-digit drop on the Dow in early trading. Most other stocks are flat, or up a bit.

Wall Street is open, and shares are dropping in early trading.

The Dow Jones index fell by 116 points in the first few minutes, a drop of 0.7%,x to 15257. The S&P 500 and Nasdaq indices are also in the red, following today’s losses in Europe.

The Dow is being dragged down by IBM, whose shares have fallen 6% after it missed revenue forecasts last night, blaming a slowdown in China.

US short-term government debt is being treated as an ultra-safe haven again, with prices rising back to their previous levels after dipping in recent days.

Makes sense, as there’s no danger of America defaulting in October and November.

These price rises have driven down the interest rates on one-month Treasury bills to the lowest rate since the end of September. A bill that matures on 14 November is now yielding just 0.01%, compared to 0.15% yesterday.

The weekly US jobs data has just been released, and shows that more people filed new benefit claims than expected last week.

A total of 358,000 new jobless claims were filed in the seven days to October 12, down from 374,000 the previous week, but rather higher than the 335,000 that Wall Street expected.

Here’s some more snaps:

17-Oct-201313:30 – US JOBLESS CLAIMS 4-WK AVG ROSE TO 336,500 OCT 12 WEEK FROM 324,750 PRIOR WEEK (PREVIOUS 325,000)

17-Oct-2013 13:30 – US CONTINUED CLAIMS FELL TO 2.859 MLN (CONS. 2.915 MLN) OCT 5 WEEK FROM 2.902 MLN PRIOR WEEK (PREV 2.905 MLN)

17-Oct-2013 13:30 – US INSURED UNEMPLOYMENT RATE UNCHANGED AT 2.2 PCT OCT 5 WEEK FROM PRIOR WEEK (PREV 2.2 PCT)

17-Oct-2013 13:30 – US LABOR DEPT OFFICIAL SAYS NO NOTICEABLE INCREASE IN NEW CLAIMS FROM NON-FEDERAL WORKERS AFFECTED BY THE GOVERNMENT SHUTDOWN 

The full spending bill is online here as a pdf.

Goldman Sachs is pinning its hopes on Congress resolving the long-term uncertainty over America’s budgets, as it releases its third-quarter results which showed a 2% drop in net profits compared with last year.

Goldman reported a sharp drop in net revenues in the last three months, to $6.722bn compared to $8.612bn in the three months to June 30. Weak bond trading activity is one factor.

Lloyd C. Blankfein, chairman and CEO, said:

The third quarter’s results reflected a period of slow client activity.

Still, we saw various signs that our clients are prepared to act on significant transactions and we believe that the firm is well positioned to help our clients accomplish their objectives.

As longer term U.S. budget issues are resolved, we could see an improvement in corporate and investor sentiment that would help lay the basis for a more sustained recovery.

Goldman also reported net profits (applicable to shareholders) of $1.429bn in the three months to 30 September, down from $1.861bn in the previous quarter, and $1.458bn a year go.

UK business secretary Vince Cable has moved another step closer to launching a new business bank, by naming former Standard Chartered exec Ron Emerson as chairman (via Jill Treanor)

Over on Business Insider, Henry Blodget is laying into the 144 Republicans (here’s a list) who voted against the spending bill last night.

Blodget’s not too impressed with the deal (like most people we’ve quoted today):

It’s not a long-term deal, of course.

In fact, it’s not even a medium-term deal.

It’s a two or three month deal.

Which means that the Congress-people elected to lead our country will once again soon be in their favorite position in the world: In front of TV cameras grandstanding about how “the opposition” is destroying the country and demanding that everyone kowtow to their every demand.

But he’s particularly irked that a senior player like Paul Ryan (the Republican Party nominee for Vice President in the 2012 election) could oppose a deal that fended off the default risk, saying:

[Ryan] has a reputation for being fiscally responsible, on account of some budget ideas he has put forward in recent years. Ryan’s vote to send the U.S. into default should delete this reputation for fiscal responsibility once and for all.

Here Are The 144 Republicans Who Voted To Send The U.S. Into Default

A new straw poll from Citigroup suggests America won’t suffer a credit rating downgrade from a ‘big three’ agency (rather than China’s Dagong) in the next six months:

Reuters has peered into the details of the spending bill signed by president Obama shortly after midnight in Washington, and found that it contains many commitments beyond simply extending the debt limit.

Amid the 35 pages are $450m for Colorado flood relief and more than $600m for fire management and fire suppression, plus money to spend up paying benefits to veterans . There’s also an extra $1.2bn for a dam in Kentucky, plus fresh authority for the Department of Defense to continue to support African forces pursuing Joseph Kony and the Lord’s Resistance Army.

There’s also no pay rise for Congress, it says:

Also notable is what the 35 pages do not include.

Congress likely was wise to spell out that its members will not see any pay increase as a result of the deal. The bill states that members will not receive any cost of living adjustments during the fiscal year 2014 that began on October 1.

The East Coast of America is waking up to a new day with a functioning government and no imminent risk of stumbling into a debt default.

Bloomberg TV has been talking about the political ramifications of last night’s deal. Ian Bremmer, Eurasia group president, argued that a ‘grand bargain’ (of sorts) has been carved out:

Bremmer said:

There was a grand bargain – the Republicans have imploded, but [Barack] Obama has frittered away the first year of his second term as president.

Obviously not the long-term agreement on fiscal policy which is needed.

One important element of last night’s deal is that the House and the Senate will set up a ‘budget conference’, which will deliver a report by mid-December.

Peter Cook, Bloomberg’s chief Washington correspondent, says that this panel will meet this morning to start discussing long-term fiscal plans.

They’re going to meet over breakfast… to try and get things off on the right foot.

No surprise that the cost of insuring US government debt against default has fallen this morning.

A one-year credit default swap (which would pay out if America defaulted) has dropped by 7 basis points to 51 bps, data provider Markit reported.

It had hit a two year high of 75 basis points yesterday (meaning it costs $75,000 to insure $10m of Treasury bills).

More importantly, perhaps, this is still more than the cost of a five-year CDS contract (which is trading at 32 basis points).

A one-year CDS contract should be cheaper, given the risk of long-term uncertainty. But in America’s case right now, the uncertainty is still in the short term.

The US debt ceiling deal continues to get an underwhelming response in the financial world, with the FTSE 100 still in the red (down 20 points at 6551).

As flagged up at 8.37am, City experts are worried that Congress only extended the US debt ceiling by four months, and only fund the Federal government until January.

Many fear a rerun of last month’s battles, once US politicians sit down to consider longer-term budget .

Luke Bartholomew, investment analyst at Aberdeen Asset Management, calls it a “a hollow victory for Capitol Hill”:

The debt ceiling standoff has ended with the starting gun being fired on negotiations on automatic budget cuts in the form of the sequestration. That could be a good thing if it means some of the more arbitrary cuts are replaced by reasoned ones. But that will require Republicans and Democrats to cooperate which can never be assumed.

The US can take a sigh of relief for now but the New Year could bring a dangerous sense of déjà vu.

“These budget talks have cast a cloud over the US’s international reputation and heaped pressure on the Fed. A decision to taper QE was expected in December but the government shutdown means the Fed is deprived of the very economic data it’s said it will base its decisions on.”

Here’s our latest news story on the US debt ceiling deal, and Christine Lagarde’s warning that America must stop flirting with disaster over its borrowing limits:

US shutdown: IMF chief calls for stability after debt crisis averted

Back on those reports that Dagong has downgraded the US credit rating — journalist Alexander Smith has got hold of the full statement, and uploaded it here.

Here’s a flavour:

For a long time the U.S. government maintains its solvency by repaying its old debts through raising new debts, which constantly aggravates the vulnerability of the federal government’s solvency.

Hence the government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future.

Dagong should be calling me back at some point to discuss the situation….

Good economic news in the UK — retail sales rose by 0.6% on a monthly basis in September, twice as fast as expected.

The Office for National Statistics reported that spending on household goods jumped by 3.0% compared with August, while textiles and clothing spending was up 1.2%.

It’s another encouraging development, following yesterday’s drop in the number of people claiming unemployment benefit. It’s also a little curious, given wages continue to lag well behind inflation.

Last night’s deal to avert a US debt ceiling disaster should also cheer the high street, as the crucial festive period approached. Richard Lowe, head of retail & wholesale at Barclays, says Britain could enjoy a good Christmas:

September’s figures bring to a close a summer of good results and good levels of growth in the sector.

Looking ahead, the high street is already filling up with glittering displays to tempt shoppers in the lead up to what we expect to be a strong Christmas.

I’m still trying to find the full statement from Dagong. (its website keeps flashing up error messages).

In the meantime, Reuters’ IFR Markets bureau flags up that the agency also left the US rating on a ‘negative outlook’, suggesting it could cut the A- rating further.

Here’s IFR take, from the Reuters terminal:

Chinese rating agency Dagong has downgraded the United States to A- from A and maintained a negative outlook on the sovereign’s credit.

The agency suggested that, while a default has been averted by a last minute agreement in Congress, the fundamental situation of debt growth outpacing fiscal income and GDP remains unchanged.

“Hence the US government is still approaching the verge of default crisis, a situation that cannot be substantially alleviated in the foreseeable future,” Dagong said in a press release.

Dagong’s ratings are hardly followed outside of China.

The agency also classifies most countries it follows very differently from major agencies such as Moody’s, Standard & Poor’s and Fitch.

For instance, like the major agencies, Dagong rates Norway Triple A. However, the US was rated A and the United Kingdom has an A+ rating with Dagong, while Moody’s for one, has the UK at and the US at Aaa, the highest level on the New York-based agency’s scale.

Yet, the Chinese agency is not alone in pointing out that the creditworthiness of the United States is not as good as it once was.

Yesterday, Fitch put the Triple A rating it gives to the US under negative watch.In August 2011, Standard & Poor’s downgraded the US to AA+ after a protracted debt ceiling debate in Congress brought the government to the verge of a shutdown.

Apart from the symbolic meaning of the downgrade, though, Dagong’s move is expected to have no effect on markets.

Although, as fastFT points out, the gold price has risen this morning:

Gold prices were higher after the reports circulated, with spot prices up $29 on the day at $1,310 a troy ounce.

Even before today’s reported downgrade, Dagong only classed America as a “High credit rating” nation, with a single-A rating. That’s several notches below AAA.

Why? Because Dagong has long been concerned that America’s national debt is too high, and questioned whether the US is really committed to repaying its creditors (as this Bloomberg story from 2010 shows) .

After initial relief, the US dollar is also falling this morning. It’s lost half a percent against both the pound (which has risen to $1.603), and the euro ($1.361).

Reuters says the fall is due to traders pondering the damage caused to the US economy ($24bn of lost output, according to S&P)

This could make it harder for the Federal Reserve to slow its quantitative easing stimulus programme (which is pumping $85bn into the US economy each month).

“We would expect this impasse to shave off part of fourth-quarter growth and hurt consumer confidence especially from the government sector,” said Simon Derrick, head of currency strategy at BNY Mellon.

“What this does is push back expectations of Fed tapering to early 2014 and this is dollar negative.”

Overnight, World Bank President Jim Yong Kim summed up the relief in the corridors of power, saying the global economy has “dodged a potential catastrophe”.

Earlier today our Australian economics blogger, Greg Jericho, held a Q&A on the debt ceiling deal and its implications for the global economy.

Here’s a flavour, on why the debt ceiling should be canned:

The main thing that needs to be done is just abolish the debt ceiling. The market doesn’t give a stuff about it being raised – the bond yields never go up because it is raised, they only go up when Congress threatens to block move for it to be raised.

But I can’t see it happening, purely because there are those who view it as a weapon in their arsenal that they can use to force spending cuts etc. But what today has really shown is that if the other side refuses to budget, the threat to allow a default ends up being an empty one.

Greg Jericho answers your questions on the US debt default crisis – as it happened

From Washington, my colleagues Paul Lewis and Dan Roberts report on how the deal leaves the Republican party licking its wounds:

The US Congress passed legislation to rescue the country from the brink of a looming debt default on Wednesday night, bringing an end to the two-week crisis that has closed large portions of the government and revealed deep divisions in the Republican party.

The bill, a temporary fix that will last only through to the start of 2014, passed easily with broad bipartisan support in the Senate, where Democratic and Republican leaders forged the agreement just hours earlier.

But it was able to pass the Republican-dominated House shortly after 10pm only with the support of Democrats. It laid bare a rupture between moderate and more rightwing Republicans, who triggered the crisis by using their budgetary leverage in what turned out to be a futile effort to undermine Barack Obama’s signature healthcare reforms.

Only 87 House Republicans voted for the bill. The party leadership was opposed by 144 members, including Paul Ryan, the former vice-presidential candidate and a key figure in Congress.

In brief remarks at the White House shortly before the House vote, Obama said he hoped the deal would “lift the cloud of uncertainty” that had hung over the country in recent weeks.