Optimism sneaks into stock markets
NEW YORK — Optimism that President Obama and congressional leaders will reach a deal on the budget deficit and avoid the “fiscal cliff” helped stocks notch their first advance in four days.
The market started lower on Friday but spiked higher shortly before midday as the top members of the House and Senate spoke at the White House after a closed-door session with Obama.
House Speaker John Boehner, R-Ohio, and Senate Minority Leader Mitch McConnell, R-Ky., said they offered higher tax revenue as part of a deal. Boehner said he outlined a framework that is consistent with Obama's call for a “balanced” approach of higher revenue and spending cuts.
“It's a good start ... the fact that they were all standing together,” said Ben Schwartz, the chief market strategist at Lightspeed Financial, a New York-based broker.
The Dow Jones industrial average closed up 45.93 points, or 0.4 percent, at 12,588.31, after falling as much as 71 points during midmorning. The Standard & Poor's 500 index rose 6.55 points, or 0.5 percent, to 1,359.88, and the Nasdaq rose 16.19 points, or 0.6 percent, to 2,853.13.
Investor concern that Obama and Congress won't reach a deal on how to cut the deficit has caused a sell-off in stocks since Election Day. Stocks fell on Wednesday, when Obama insisted that higher taxes on wealthy Americans would have to be part of any deal and that he would not cave to Republicans who have pressed for tax cuts first passed by President George W. Bush to be extended for all income earners.
The Dow is down 5 percent since Nov. 6. If an agreement is not made, automatic government spending cuts and tax increases are set to kick in at the beginning of next year. The measures total about $700 billion for 2013 and could send the country back into recession.
Mitch Stapley, chief investment officer at Fifth Third Asset Management, says investors and traders are likely to be in for a rough ride until the politicians have brokered a deal.
“Volatility is going to be the hallmark as we go through this process. ... It's going to be a very choppy period coming up,” said Stapley, who is based in Grand Rapids, Mich.
The Dow still ended lower for the week, logging a fourth straight weekly decline. That slump has pared the index's gains for the year to 3 percent. The S&P 500 also ended the week lower and has fallen in three of the past four weeks.
Mixed earnings reports also weighed on stocks.
Dell fell 70 cents, 7.3 percent, to $8.86. The computer maker is struggling as consumers switch to tablets and smartphones away from PCs. Dell said its revenue may fall as much as 13 percent in the fourth quarter.
Sears fell $10.99, or 19 percent, to $47.49 when the retailer said sales at its Kmart and Sears stores continued to tumble.
Superstorm Sandy depressed industrial output in October, while production of machinery and equipment declined sharply, reflecting a more cautious outlook among businesses, according to a Federal Reserve report.
The Federal Reserve says industrial output fell 0.4 percent last month, after a 0.2 percent gain in September. Excluding the storm's impact, production at the nation's factories, mines and utilities would have been up about 0.6 percent.
The yield on the benchmark 10-year Treasury note edged down to 1.58 percent from 1.59 percent late Thursday.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Emergency room visits decline as navigators steer patients to proper medical care
- MSA Safety products in demand to protect workers in dangerous jobs
- U.S. Steel warns it may lay off almost 2,000 workers in Alabama, Texas
- Energy companies vie for experienced workers with skills in high demand
- Drops in gasoline prices won’t likely last, analysts say
- Beaver County power plant cleaning up spill into creek
- Drillers bid millions for oil, gas beneath West Virginia public lands
- Milk industry swats back at ‘anti-dairy’ trend
- Chevron laying off 162 workers from Moon-based unit
- $300K in wine bottles stolen from Napa Valley restaurant found in North Carolina cellar
- Reliable alternative to water could ease economic, environmental issues for gas drillers