October 14, 2013 / 1:19 PM / in 4 years

US STOCKS-Wall St set to drop at open on default concerns

* Some progress, but no clear sign of end to fiscal impasse

* Unexpected drop in exports from China weigh on global equities

* Futures off: Dow 106 pts; S&P 12.8 pts; Nasdaq 19.25 pts

By Angela Moon

NEW YORK, Oct 14 (Reuters) - Wall Street was set for a lower open on Monday, focused on events in Washington after weekend talks between Republicans and Democrats showed some progress but left alive the risk of a possible U.S. default in three days, pressuring stocks.

The lack of a definitive agreement was putting pressure on equities as there were no guarantees an historic debt default would be avoided. In addition, the government shutdown, entering its third week, was seen as a drag on the economy.

Senate Majority Leader Harry Reid and Republican leader Mitch McConnell held talks that Reid later called “substantive.” Reid did not provide details, but his remarks gave some hope that Congress soon might pass legislation to fund the government and raise its borrowing authority.

Both the Senate and House are scheduled to be in session on Monday, even though it is the Columbus Day federal holiday. No economic data and major earnings were due for Monday.

“Politics will likely dominate the market’s outlook in the short term, so stay abreast of the news out of Washington,” said Tony Venosa, senior options strategist at Schaeffer’s investment Research in Cincinnati, Ohio, in a note to clients.

Also pressuring the market was trade data from China, which showed an unexpected decrease in exports in September for the weakest performance in three months. Another set of data showed Chinese consumer prices rose faster than expected in September.

In company news, Netflix Inc shares rose 3.3 percent at $310.88 after the Wall Street Journal reported that it is in talks with several U.S. cable television companies, including Comcast Corp and Suddenlink Communications to make its streaming video service available through their set-top boxes.

S&P 500 futures fell 12.5 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures fell 106 points and Nasdaq 100 futures lost 19.25 points.

U.S. stocks had risen strongly ahead of the weekend on hopes a deal to raise the $16.7 trillion federal borrowing limit was near. Failure to raise the debt ceiling would leave the world’s biggest economy unable to pay its bills in the coming weeks.

International Monetary Fund managing director Christine Lagarde, speaking in Washington, warned of “massive disruption” to the global economy if the U.S. debt ceiling, which will be reached on Thursday, was not lifted.

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