Stock futures flat as stocks poised for another down week
By Ryan Vlastelica | November 17, 2012 12:21 AM EST
Stock index futures were little changed on Friday as investors remained skeptical that a meeting between President Barack Obama and congressional leaders would make progress on dealing with the "fiscal cliff."
Democrats and Republicans appeared to dig in their heels into opposing positions before the gathering, scheduled to begin at 10:15 a.m (15:15 GMT) at the White House.
Concerns over the cliff -- large, automatic budget cuts and tax hikes that begin to take effect in the new year -- have pressured stocks ever since the November 6 presidential election. The S&P is on track to notch a second straight week of losses of more than 1 percent.
Senate Republican leader Mitch McConnell said Republicans won't tax rates, echoing last year's political impasse over raising the U.S. debt ceiling.
Obama "will not sign, under any circumstances, an extension of tax cuts for the top 2 percent of American earners," Obama spokesman Jay Carney told reporters.
Investors worry that if no deal is reached, the economy could slide into recession. These concerns have overshadowed other issues in the economy, resulting in a market where gains have been difficult to sustain, contributing to the S&P's 4.3 percent decline over the past two weeks.
"I have to believe the government will come to some kind of resolution, but every day that passes without any progress is another day where the path of least resistance will be down," said Robert Pavlik, chief market strategist at Banyan Partners LLC in New York.
S&P 500 futures edged up 1 point and were slightly above 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 lost 29 points and Nasdaq 100 futures slid 1.25 points.
The S&P is currently down 1.9 percent for the week, while the Dow is off 2.1 percent and the Nasdaq is down 2.3 percent. The S&P 500 sunk to a 3 1/2-month closing low on Thursday and remained well below its 200-day moving average, which it pierced last week.
While the S&P remains up 7.6 percent for the year, what had looked like a stellar 2012 for stocks has turned into merely an average year. Though some investors have become more inclined to protect their gains as 2012 draws to a close, others view the decline as a buying opportunity.
"I think we're closer to the end of this decline than to the beginning, and valuations are becoming extremely attractive," Pavlik said. "If you're not putting a buying list together, you're doing yourself a disservice."
Sears Holdings Corp
J.M. Smucker Co
The European debt crisis also remains in focus as the euro zone relapsed into its second recession since 2009 in the third quarter. European shares fell 0.4 percent, pressured by weakness in banks.
A flare-up in violence in the Middle East added to market unease as Israeli warplanes bombed targets in and around Gaza city for a second day, while two rockets fired from the Gaza Strip targeted Tel Aviv.
U.S. stocks ended flat on Thursday with investors wary of making bets in the face of a drawn-out battle over impending tax and spending changes, while retailer Wal-Mart tumbled after disappointing sales.
(Editing by Kenneth Barry)