Wall Street falls, hit by Reid's "fiscal cliff" comments
By Rodrigo Campos | November 28, 2012 8:42 AM EST
Stocks slid on Tuesday in a choppy session, losing ground in the last hour before the close after Senate Majority Leader Harry Reid expressed disappointment that there has been "little progress" in dealing with the "fiscal cliff."
The market was flat for most of the session but fell sharply after Reid's comments, a signal that investors remain skittish about the wrangling in Washington. The CBOE Volatility Index, or VIX, rose on Reid's words.
"It may be that the market feels the goodwill before (last week's) Thanksgiving is evolving into more political intransigence," said Quincy Krosby, market strategist at Prudential Financial in Newark.
"The clock is ticking on Wall Street, regarding a framework for (political) consensus," she said.
Markets are focused on whether Congress and the White House can agree on ways to avoid some $600 billion in automatic spending cuts and tax increases that are due to kick in early next year.
As budget talks linger, Las Vegas Sands
Higher dividend and capital gains taxes are part of the negotiations in Washington and may rise even if a deal is crafted.
Las Vegas Sands jumped 5.3 percent to $46.36. Supertex rose 6.9 percent to $18.
The S&P 500's modest losses on Tuesday marked its worst day in eight sessions - indicating traders are unwilling to sell aggressively as a deal probably would trigger a rally. The benchmark S&P 500 once again closed below 1,400, a key psychological level that it had reclaimed last week as it rose nearly 4 percent.
The VIX <.VIX> shot up 2.7 percent to 15.92 at the close. Between 2 p.m. and 3 p.m. in New York, the VIX was up 3.9 percent.
The Dow Jones industrial average <.DJI> fell 89.24 points, or 0.69 percent, to 12,878.13 at the close. The S&P 500 <.SPX> dropped 7.35 points, or 0.52 percent, to finish at 1,398.94. The Nasdaq Composite <.IXIC> lost 8.99 points, or 0.30 percent, to end at 2,967.79.
Dealings in Washington obscured strong economic figures, including an increase in planned business spending and consumer confidence hitting its highest level in more than four years.
Strengthening the case for a sustained rebound in housing, single-family home prices rose for an eighth straight month in September. Shares of M/I Homes
"As long as you have interest rates as low as they are right now, housing is definitely back," said Brian Amidei, managing director at HighTower Advisors in Palm Desert, California.
In another good sign for consumer demand, Corning Inc
Food maker Ralcorp Holdings
McMoRan Exploration Co
On the NYSE, roughly five issues fell for every four that rose. On Nasdaq, six stocks fell for every five that rose.
(Reporting by Rodrigo Campos; Additional reporting by Caroline Valetkevitch; Editing by Jan Paschal)
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