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Morning Market Roundup: Putin's Energy Decree, U.S. Trade Deficit Grows, Another Moody's Downgrade?


Here’s what’s important in the business world this morning:

Moody’s: The U.S. government's debt rating could be heading for the "fiscal cliff" along with the federal budget.

Moody's Investors Service says it would likely cut its "Aaa" rating on U.S. government debt, probably by one notch, if budget negotiations fail.

If Congress does not reach a budget deal, more than $600 billion in spending cuts and tax increases will kick in next year, a scenario that's been dubbed the "fiscal cliff" because it is likely to send the economy back into recession and drive unemployment up.

Moody's says it is difficult to predict when Congress will reach a deal, and it will likely keep its current rating and "negative" outlook until the outcome of talks is clear. The ratings agency is also watching talks on increasing the nation's debt limit.

Vladimir Putin & Energy: Russian President Vladimir Putin has signed a decree that could hinder an EU probe into gas company Gazprom's activities in Europe.

The European Commission last week launched a probe to find out whether Gazprom blocked competition in gas markets in Central and Eastern Europe. State-owned Gazprom has been under pressure for its pricing for some time.

Seven days after the EU started the investigation, Putin signed a decree on Tuesday, barring strategic Russian enterprises from disclosing information to foreign regulators, changing contracts and selling property abroad without government permission. The law also specifies that these companies will need permission to change the pricing of their foreign contracts.

Under the law, Gazprom will not be able to cooperate fully and timely with regulators and investigators abroad.

Trade Deficit: The U.S. trade deficit grew slightly to $42 billion in July, widened by sharp drops in exports to Europe, India and Brazil that offset a steep decline in oil imports.

The Commerce Department said Tuesday that the trade deficit widened 0.2 percent from June's deficit of $41.9 billion.

U.S. exports fell 1 percent to $183.3 billion, lowered by fewer sales of autos, telecommunications equipment and heavy machinery. Imports declined 0.8 percent to $225.3 billion.

A wider trade deficit acts as a drag on growth because the U.S. is typically spending more on imports while taking in less from the sales of American-made goods. U.S. growth slowed to a 1.7 percent annual rate in the April-June quarter, well below what is needed to boost a slackening job market.

U.S. Futures: U.S. stock futures rose Tuesday though many investors are waiting on the sidelines for what could potentially turn into critical developments in both the U.S. and in Europe.

Germany's high court rejected a last-minute plea Tuesday to postpone a ruling that could block the country's approval of a permanent bailout fund for the European Union. Calls for an injunction from conservative lawmakers who say the fund violates the country's constitution now goes to the country's Federal Constitutional Court on Wednesday.

And global markets remain focused intensely on the U.S. Federal Reserve, whose monetary policymaking body gathers for a two-day meeting that begins Wednesday. Most expect the Fed to take some sort of action to revive an economy that is in danger of stalling.

Dow Jones industrial futures rose 36 points to 13,273. The broader S&P futures added 3.4 points to 1,429.80. Nasdaq futures tacked on 5.75 points to 2,790.25.

The Associated Press contributed to this report.

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