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S&P 500 Could Plunge 20% if US Fails to Raise Debt Ceiling, UBS Warns

  • US failure to pay debts would hit GDP, stocks and jobs: UBS
  • Firm’s base-case scenario is for US to lift the debt ceiling
Bloomberg business news
GOP Negotiators Walk Out of Debt Limit Talks

Stocks are primed for a precipitous drop if the US fails to raise the debt limit and delays government payments. 

That’s the warning from a team of UBS strategists. Although it’s unlikely, if the US formally defaults and delays all payments beyond principal payments for a week, the S&P 500 will fall as much as 20% toward 3,400, the team led by economist Jonathan Pingle said.