"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.
More from MarketWatch:
VIDEO ON MSN MONEY
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.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] S&P futures vs fair value: -2.40. Nasdaq futures vs fair value: -4.30. U.S. equity futures trade little changed amid subdued action overseas. The S&P 500 futures hover two points below fair value.
Reviewing overnight developments:
- Asian markets ended higher. Japan's Nikkei +0.5%, Hong Kong's Hang Seng +0.9%, and China's Shanghai Composite +2.4%
- There was no economic data reported on Monday
- In news:
- Chinese ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'