NEW York City may be frying in near record temperatures but Wall Street has been feeling the heat for months. Wrangling over the US debt ceiling and questions marks over corporate earnings mean markets are unlikely to get a break any time soon.

Wall Street is set to close its worst three months in a year as July draws to a close this week after a roller coaster ride for markets. Whacked out fund managers hitting the beach in August may find themselves fiddling with their BlackBerrys more than the little cocktail umbrellas.

With Eurozone leaders having reached a deal for yet another bailout for debt-laden Greece, investors will be free to chew over Washington’s rancour with even more attention.

Negotiations between President Barack Obama and the top Republican in the House of Representatives, John Boehner, still looked far from a deal to avert a looming US default, lawmakers said on Friday, raising the likelihood of more volatility this week if no solution was reached over the weekend.

“It’s likely an agreement in any form will cause a relief rally for equities,” said Glenn Starkman, global head of sales trading at Dahlman Rose in New York.

But on the other side of the coin, the prolonged and partisan dispute over solving the country’s debt crisis means there is still a downside risk.

“Who knows where that is going to go,” said Nick Kalivas, an analyst at MF Global in Chicago. “We’re vulnerable to a buyers’ strike if we don’t get any news.”