Wall Street ticks lower on "fiscal cliff" stalemate
By Ryan Vlastelica | December 21, 2012 2:21 AM EST
Stocks edged slightly lower on Thursday as investors fretted that a deal on the U.S. budget wouldn't come as soon as they had hoped after President Barack Obama threatened to veto a controversial Republican plan.
The market barely reacted to a round of strong data, including on gross domestic product growth and housing, suggesting talks to avert the "fiscal cliff," steep tax hikes and spending cuts due to take effect in 2013, remain the primary focus for markets.
Republican Speaker of the House John Boehner said Wednesday his chamber would pass a proposal that spares many wealthy Americans from tax hikes needed to balance the budget. Obama has threatened to veto the plan if it passes, while some Republicans oppose any deal featuring tax increases.
"The closer we get to the end of the year without a deal, the more optimism is going to evaporate," said Todd Schoenberger, managing partner at LandColt Capital in New York. "Volatility is going to be extreme until there's a deal, and the probability of being caught on the downside is much greater than being on the upside."
While investors have hoped for an agreement soon between policy makers over the fiscal cliff, this seems unlikely as wrangling continues over the details.
The Dow Jones industrial average <.DJI> was down 18.74 points, or 0.14 percent, at 13,233.23. The Standard & Poor's 500 Index <.SPX> was down 0.84 points, or 0.06 percent, at 1,434.97. The Nasdaq Composite Index <.IXIC> was down 4.18 points, or 0.14 percent, at 3,040.18.
Stocks rallied earlier in the week on signs of progress in the negotiations, led by banking and energy shares, which tend to outperform in times of economic expansion. On signs of complications, however, many have turned to hedging their bets through options and exchange-traded funds.
The U.S. economy grew 3.1 percent in the third quarter, faster than previously estimated, while the number of Americans filing new claims for jobless benefits rose more than expected in the latest week.
"It is great to see this kind of growth, but investors know it could all disappear if there's no deal on the cliff," Schoenberger said. "Macro data may be on the back burner for a while."
Existing home sales jumped 5.9 percent in November, more than expected, and by the fastest monthly place in three years. And the Federal Reserve Bank of Philadelphia's December index of business conditions in the U.S. Mid-Atlantic region rose to 8.1 from -10.7 in November. Analysts were looking for a read of -3.
(Editing by Bernadette Baum)
Most Popular Slideshows
Join the Conversation
- iOS 8 Jailbreak Release Date Likely this October 2014 with Pangu not Evad3rs Firming Up as Creator
- Top 4 Free-To-Download Apps for Fuller iPhone 6, 6 Plus Experience
- Battery Saving Android 5.0 Lollipop Feature Extends The Battery Life Of Your Android Device By 90 Minutes And Displays Orange Bar While Power Saving Mode Is On
- Chilling: New ISIS Video Addresses Australia; Aussie Teen Delivers Message
- Apple Inc. (AAPL) Stock Set to Soar Beyond $100 Despite Decline After New iPad Launch
- Russia Beefs Up Gold Reserves To Offset Heat of Sanctions And Undercut Dollar
- Australia's 'No Way' Anti-Asylum Seeker Poster Sparks Outrage