Futures dip as investors worry about "fiscal cliff"
By Angela Moon | November 29, 2012 1:14 AM EST
U.S. stock index futures fell on Wednesday, with the S&P 500 on course for a third straight day of decline, as investors worried about comments coming from Washington that "little progress" has been made in talks to avoid spending cuts and tax hikes.
Investors will get readings on new-home sales and the Federal Reserve's Beige Book view of the state of the economy later on Wednesday, but the market is mainly focused on the negotiations about long-term budget deficit reduction.
Obama's meeting with influential leaders from the corporate world is part of his push for Congress to extend tax cuts for middle income Americans, one flashpoint in a standoff with Republicans in Congress over a series of tax hikes and spending cuts, dubbed the "fiscal cliff," that will go into effect next year if lawmakers and the president cannot come up with a deal to stop them.
"These CEOs know that the market will sell off without any resolution, so I think it's encouraging that they are meeting with the president," said Sal Arnuk, co-founder at Themis Trading at Chatham, New Jersey.
One possible result of the deficit reduction talks is a rise in the tax rate on dividends, prompting some firms to issue special dividends or move up plans for dividends.
The latest example is retailer Costco Wholesale Corp
U.S. stocks slid on Tuesday after Senate Majority Leader Harry Reid expressed disappointment that there has been "little progress" in dealing with the "fiscal cliff."
S&P 500 futures were down 4.7 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 32 points and Nasdaq 100 futures were down 6.25 points.
Knight Capital Group Inc
Deep divisions at the Federal Reserve were on display on Tuesday, just two weeks before the U.S. central bank's next policy-setting meeting, with one top Fed official pushing for more easing, and another advocating limits. The Fed will release its Beige Book summary of regional economic conditions at 2 p.m. (1900 GMT).
New home sales data is due at 10 a.m. (1500 GMT). Economists in a Reuters survey forecast a reading of 390,000 for October versus the previous reading of 389,000.
Green Mountain Coffee Roasters Inc
The European Commission gave the go ahead for Spain to overhaul its stricken nationalized banks on Wednesday and opened the door for nearly 40 billion euros in euro zone aid to be disbursed, offering hope for an end to Spain's banking crisis.
(Reporting By Angela Moon; Editing by Kenneth Barry)
Most Popular Slideshows
- Prince Harry & Camilla Thurlow Getting Serious, St. Tropez Holiday Before The Prince’s 30th Birthday [PHOTOS]
- 2014 US Open: Hottest Male Tennis Players To Watch [PHOTOS]
- What Happens When You Give Up Sex For 12 Months? – Dialogue With Peter Lynagh – Exclusive
- 2014 US Open: Hottest Female Tennis Athletes [PHOTOS]
Join the Conversation
- 5.5-Inch iPhone 6 is iPhone Air on Sept 19 Release Date: 5 Things to Consider Before Buying
- Nexus 6 Release Date Update: Moto X+1 Look Leaked, Nexus X or Shamu Moved to Demo Phase
- HTC One M8 for Windows Vs. Nokia Lumia Icon, The Battle Of Windows Phones
- Leaker of Actresses Nude Photos Accepting PayPal Donations in Exchange For Posting Alleged Sex Video of Jennifer Lawrence, Has Naked Pictures of 100 Hollywood A-Listers
- ISIS Will Target the U.S. Power Grid, Former CIA Says; Could Tap Other Fellow Extremist Groups to Do the Job
- Jennifer Lawrence's Nude Photos Leaked on Find My iPhone, Apple 'Outraged' But Says Systems 'Not Breached'
- Russia Massacres Ukrainian Volunteer Battalions—Surviving Members Alleged