"The best scenario is mixing in some sort of long-term reform into this because then we can avoid this sort of cliff situation again," Stone said.
Even if Congress does nothing and lets all the tax hikes and spending cuts go into effect, it shouldn't hurt stocks that badly, given that higher taxes have not been shown to have a negative effect on stocks, said Brian Belski, the chief investment strategist at BMO Capital Markets.
"The markets are about the economic cycle, not taxes," Belski said. What's missing from the political debate is some sort of tax incentive for businesses to ramp up hiring and capital investment, he said, adding that such an incentive would add to tax coffers by creating more jobs. Such a plan, however, would have to cover three to five years to be useful for corporate planning purposes, he said.
"Overall, the key to this whole thing is to report a conclusion that is crystal clear, recognizable and understandable," Belski said.
Possible losers and winners
Energy companies stand out as being possible losers as some of their tax breaks could disappear, said LPL's Kleintop. By extension, higher energy costs would then be passed along to utilities, he said.
Another possible hit to utilities could be in the area of dividend taxes, given the sector's traditionally high dividend yield rate. If Congress doesn't act, the dividend tax rate is set to nearly triple from the current 15%.
That, however, may be an irrational market reaction to an expected higher dividend tax. The performance of dividend stocks isn't necessarily hampered by higher tax rates, said BMO's Belski, using data going back to 1962 on the top 20% of Standard & Poor’s 500 Index ($INX) dividend stocks ranked by yield.
Industrial stocks may see a boost if tax incentives are part of a fiscal cliff resolution, Belski said. Defense contractor stocks, however, remain under the microscope, according to the strategist, given the billions in automatic military spending cuts in play.
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Deal, no deal. Does it really mean anything anymore? What does it mean to have a debt ceiling that only gets raised and funded by phony funny money printed by the Fed every time the central government and their Wall Street masters need more? It's all about manipulation of the monetary system to rob Peter and pay Paul. That's all there is to it in the end. Look at the European Union and the number of so-called deals they have struck in the last two years. To what end? Are our socio(pathic) political based budget deals really that much different in scope than theirs?
Maybe a deal means something to Wall Street. I means nothing to Main Street.
Someone made this comment on a post of mine the other day, sorry I forget your name and I am too lazy to go back and check but if you are reading this you get all credit, it is a scary thought but could be true;
What if the cliff is the deal..........
Both sides can make it seem like they didn't give in.......
When you think about is there a deal that will hurt less then this? Tax increases, spending cuts, and military cuts, no matter how you slice them they will hurt so really is there a deal taht they could reach that is going to be better then this?
The Washington Times Reported:
Thepromised to let them continue to set their own drug prices
Obama administration cut backroom deals with the nation’s top drug companies to win support for President Obama’s health care overhaul, threatening them with steeper taxes if they resisted and promising a better financial deal for the industry if they acquiesced
Obama agreed to drop his long-standing support for letting Americans buy cheaper foreign prescription drugs— something the pharmaceutical industry vehemently opposed — and the drugmakers promised to mount a public campaign to sell the public on the health care legislation.
The threats appeared to work, and the parties met the next month to hammer out a final deal. The drug companies agreed to pay higher Medicaid rebates and a new health care reform fee to raise $80 billion for the legislation, and promised to run positive television ads about it.
In exchange, thegave them direct input into the new policies and promised to let them continue to set their own drug prices
the Whitehouse bypassed members of its own party to iron out specific details with the drug companies.
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[BRIEFING.COM] The major averages posted solid gains ahead of tomorrow's policy directive from the Federal Open Market Committee. The S&P 500 rallied 0.8%, while the Russell 2000 (+0.3%) could not keep pace with the benchmark index.
Equity indices hovered near their flat lines during the first two hours of action, but surged in reaction to reports from the Wall Street Journal concerning tomorrow's FOMC statement. Specifically, Fed watcher Jon Hilsenrath indicated that the statement ... More
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