Investors are trying to assess the impact of the deal to raise the US national debt ceiling on international markets.

An agreement in principle to increase the national debt ceiling to 31.4 trillion. dollars, prevent a catastrophic default scenario and open up an appetite for risky investments, as well as support some industries lagging behind the technology rally, such as so-called “cyclical” stocks and smaller-cap stocks.

However, some investors are concerned that the proposed spending cuts could put pressure on US economic growth. At the same time, the negotiating process that averted a debt default threatens to undermine the US position vis-à-vis the rating agencies.

While the deal between the White House and the Republicans is positive news, the US administration still faces a number of time-consuming challenges in moving the deal forward, according to Bob Stark, Kyriba’s chief strategist. The debt deal is only the first step in Washington’s efforts to avert a liquidity crunch.

An agreement in principle to increase the national debt ceiling to 31.4 trillion. dollars, prevents a catastrophic default scenario.

Among the market sectors that are expected to benefit the most are “defensive” stocks, which fell during the session, and “cyclical” stocks along with the energy sector, said Quincy Crosby, strategist at LPL Financial. Investors hope the deal will benefit the entire market, not just a few big tech companies that keep Wall Street indices in positive territory.

Stuart Kaiser, Citi’s head of market strategy, says the deal could provide additional support to sectors that have lagged this year, such as shares of companies with weaker balance sheets and smaller caps.

For now, however, investors are focused on the cost of government spending cuts due to the growth of the US economy, Stark says. What impact does spending cuts have on US GDP and economic growth?

At the same time, political polarization in Washington could once again lead rating agencies to downgrade US debt. Fitch downgraded the US credit rating outlook to negative, as did Canada’s DBRS. As a reminder, S&P downgraded the US credit rating in 2011, just days after the last-minute deal, with the house assessing at the time that the deal would not stabilize medium-term debt dynamics. The downgrade, in turn, sent the S&P 500 down 17% between late July and mid-August 2011.

Investors are also poised for potential volatility in the US Treasury market as the US Treasury rushes to fill its empty treasury with bonds when the debt ceiling is raised. A large supply can put pressure on prices.