Stocks held back by fiscal-cliff worries

The major averages end the day little changed in light Veterans Day trading. Tuesday's market may open lower. Titanium Metals and Jefferies Group jump on merger announcements. Gilead Sciences rises on hopes for hepatitus treatment. Apple slips again.

By Charley Blaine Nov 12, 2012 5:19PM
Updated: 3:32 a.m., Wednesday

(Reuters) - Stocks pushed higher Monday as bargain-hunters emerged after last week's selloff, though concerns of a drawn-out battle over the "fiscal cliff" put a cap on gains.

Barclays cut its year-end target for the Standard & Poor's 500 Index ($INX) to 1,325 from 1,395, citing the government spending cuts and tax increases that will take effect early next year unless Congress acts before then.

The S&P 500 dropped 2.4% last week, the worst week for the index since June. The drop was partly propelled by concerns about whether there will be a timely solution to avoid the "fiscal cliff," the combination of tax increases and federal spending cuts set to take effect on Dec. 31.

At the close, the Dow Jones industrials ($INDU) were flat at 12,815. The S&P 500 was flat at 1,380, and the Nasdaq Composite Index ($COMPX) dropped 1 point to 2,904.

The Nasdaq-100 Index ($NDX) dropped 1 point to 2,583. Apple (AAPL), the biggest influence on the index, was off $4.23 to $542.83, its fourth loss in five days.

Though most consider it unlikely that a deal will not be reached, analysts fear going over the cliff could push the economy back into recession. There are also concerns that a protracted debate could hurt business and investment sentiment.

"It's just the uncertainty. It's going to continue to have that negative influence on any kind of small business growth or hiring or planning," said Alan Lancz, president of Alan B. Lancz & Associates in Toledo, Ohio.

"You not only have it for small businesses and the like, but on the investor side, too."

Stocks traded little changed for much of the day. A late afternoon rally faded at the close. Volume was light, with the U.S. bond market and government offices closed for the Veterans Day holiday.

But futures trading early Tuesday suggests a potentially nasty open. Weighing on Asian and European markets were worries about the U.S. fiscal cliff.

Eurozone finance ministers last night postponed agreement on Greece’s long-delayed 31.3-billion euro ($40 billion U.S.) aid payment for yet another week as divisions between the International Monetary Fund and EU creditors over how fast Athens must reduce its burgeoning debt levels burst into the open.

Earnings are due from Dow components Home Depot (HD) and Cisco Systems (CSCO) as well as upscale retailers Michael Kors (KORS) and Saks (SKS) and discount retailer TJX companies (TJX).

Crude oil (-CL) settled down 50 cents to $85.57 a barrel in New York; Brent crude was down 33 cents to $109.07 a barrel in London.

Gold (-GC) settled unchanged at $1,730.90 an ounce in New York.

Energy prices -- New York close



Mon.     Fri.

Month chg.

YTD chg.
Crude oil (-CL)

$85.57

$86.07

-0.78%

-13.42%
(per barrel)











Heating oil (-HO)

$2.9992

$3.0055

-2.06%

2.92%
(per gallon)











Natural gas (-NG)

$3.5700

$3.5030

-3.30%

19.44%
(per mil. BTU)











Unleaded gasoline (-RB)

$2.6763

$2.6992

1.75%

0.71%
(per gallon)











Brent crude 

$109.07

$109.40

-0.30%

1.57%
(per barrel)











Retail gasoline

$3.4560

$3.4560

-1.85%

5.49%
(per gallon; AAA)












Gilead Sciences (GILD) helped pull the Nasdaq higher after the company reported over the weekend a 100% cure rate using a combination of drugs in a small number of patients with the most common and hardest to treat form of hepatitis C. Gilead was up $8.91 to $73.92.

The S&P 500 is still up about 10% for 2012, though recent months have eroded those gains. The Nasdaq has fallen for five straight weeks.

Some major acquisition news gave investors reason for optimism on Monday. Precision Castparts (PCP) ]offered to buy Titanium Metals (TIE) for $2.9 billion, while Leucadia National (LUK) agreed to buy investment bank Jefferies Group (JEF) for $3.6 billion.

Shares of Titanium surged $4.93 to $16.50 while Jefferies climbed $2 to $16.27. Precision rose $8.36 to $179.69. Leucadia fell 66 cents to $21.14.

Overseas, a report over the weekend showed China's export growth climbed to a five-month high, beating expectations and adding to recent data suggesting the country's seven straight quarters of slowing economic growth have ended.

Investors also watched the latest developments from the euro zone debt crisis. Euro zone governments will not agree to disburse more money to debt-ravaged Greece on Monday, despite the country's approving a tough 2013 budget, because there is not yet a consensus on how to make its debts sustainable into the next decade.

As a result, the region's finance ministers may have to talk again later this week.

Short hits from the markets -- New York close



Mon.

Fri.

Month chg.

YTD chg.
Treasury yields











13-week Treasury bill

0.0900%

0.090%

-18.18%

800.00%
5-year Treasury note 

0.643%

0.639%

-10.07%

-22.53%
10-year Treasury note

1.611%

1.613%

-4.45%

-13.90%
30-year Treasury bond

2.745%

2.752%

-3.72%

-4.98%
Currencies











U.S. Dollar Index

81.106

81.098

1.40%

0.73%
British pound

1.5886

1.5911

-1.56%

2.24%
(in U.S. $)

 








U.S. $ in pounds

£0.629

£0.629

1.58%

-2.19%
Euro in dollars

$1.27

$1.27

-1.91%

-1.87%
(in U.S. $)

 








U.S. $ in euros

€ 0.787

€ 0.786

1.94%

1.90%
U.S. $ in yen 

79.62

79.44

-0.23%

3.26%
U.S. $ in Chinese

6.25

6.24

0.31%

-1.16%
yuan











Canada dollar

$1.001

$1.000

0.07%

2.03%
(in U.S. $)

 








U.S. dollar 

$1.000

$1.000

0.00%

-2.00%
(in Canadian $)

 








Commodities

 

 

 

 
Gold (-GC)

$1,730.90

$1,730.900

0.69%

10.47%
(per troy ounce)

 








Copper (-HG)

$3.468

$3.446

-1.41%

0.93%
(per pound)

 








Silver (-SI)

$32.5220

$32.599

0.64%

16.50%
(per troy ounce)

 








Wheat (-ZW)

$8.5775

$8.865

-0.78%

31.41%
(per bushel)

 








Corn (-ZC)

$7.1800

$7.388

-5.00%

11.06%
(per bushel)

 








Cotton 

$0.7088

$0.696

1.16%

-22.69%
(per pound)

 








Coffee

$1.5305

$1.499

-1.03%

-33.36%
(per pound)

 








Crude oil (-CL)

$85.57

$86.070

-0.78%

-13.42%
(per barrel)










 
U.S. bond markets were closed Monday for the Veterans Day.

-- Charley Blaine contributed to this report.
195Comments
Nov 13, 2012 1:48PM
avatar

"This is interesting. How could the Republicans have won 55 percent of the House seats at the same time that Mitt Romney received only 48 percent of the popular vote?"

 

The Congressional districts for the House of Representatives are gerrymandered. Definition:  try to get extra votes unfairly: to manipulate an electoral area, usually by altering its boundaries, in order to gain an unfair political advantage in an election. This allows both parties to draw districts that favor each party's goals. The Senate is far more representative of Americans voting majority than the House.

Nov 13, 2012 1:42PM
avatar
"Once you get out and the fluid clears from your lungs and you can actually experience the outdoors without sweating in the first three steps you'll have a sense of what living really is.  It doesn't have to be miserable.  It can actually be.. enjoyable."

It's 74 degrees, clear, and no humidity here today.

How about where you are?
Nov 13, 2012 1:15PM
avatar
I know the elections are history, already....but this piece from Huff Post bears inspection.
It begins....

I recently overheard the following conversation:

X: "Obama won a solid victory. The people have made their views clear. They stand with the Democratic Party."

Y: "Not so fast. Remember that the Republicans won a big margin in the House of Representatives. It's really a split-decision."


This is interesting. How could the Republicans have won 55 percent of the House seats at the same time that Mitt Romney received only 48 percent of the popular vote? Did that many people split their vote? It turns out the answer is "no."


Although the Republicans won 55 percent of the House seats, they received less than half of the votes for members of the House of Representatives. Indeed, more than half-a-million more Americans voted for Democratic House candidates than for Republicans House candidates. There was no split-decision. The Democrats won both the presidential election and the House election. But the Republicans won 55 percent of the seats in the House. This seems crazy. How could this be?


For the answer finish reading this.....

Ooops...meant to post this link,.....sorry!

http://www.huffingtonpost.com/geoffrey-r-stone/why-did-the-republicans-w_b_2110673.html


Nov 13, 2012 1:12PM
avatar

Steve I agree....Portions or Regions of the U.S. appear to be in an un-ending Recession..

California is not alone....

Certain areas can have a major employer go down and it affect many other businesses along with it, mainly because the area never diversified into other employed fields...So to speak the Company store closed.

Kodak is an example in Rochester,NY. But slowly went down and attrition or jobs in other businesses picked up some slack....Wasn't devastating, but was disheartening.

In a Northern Indiana town...A major employer of Recreation Vechicles(builder) ended up closing it's doors....Unemployment went from roughly 9-10% to over 16% overnight...Right at Christmas time, back at the start of our Recession...Town still has problems..And it is a fairly good sized City.

Nov 13, 2012 12:51PM
avatar

Might have made the # 100, oh well...

 

CGT..Do me and maybe others a favor talk about what maybe you know...

Leave the Pundit ramblings at the door; It appears you understand little if anything that is really going on in the World...??

Nov 13, 2012 12:46PM
avatar
Crazy 8s

I see you Liberals are already making excuses for your Messiahs failed 2nd Term.

---------------------------------------------------------

Maybe you can enlighten us on Allen West's and Scott Brown's second term?

 

AHHHH, HAAAAAA, HAAAAAAAA, HAAAAAAAAA, HAAAAAAAA, HAAAAAAAAA

Nov 13, 2012 12:43PM
avatar

I'm not making excuses for any 2nd. term.....Pretty difficult to determine yet...?

 

As for his first term,pretty hard to DEFAULT....We did not go into a depression; Against all odds.

 

And some people did fairly well....Guess it depends on who and where ??

Nov 13, 2012 12:35PM
avatar

Many of the so-called experts on projections; Feel the new normal on un-employment could be in the in the high 3s to mid 4s for a few years...That would probably depend much on business expansion, which looks somewhat dreary at best...And the Capitalist that have vowed to keep the status quo, below normal until they get their way..

Entrepenuers and competition will have a tough time overcoming the old school, because of them hardening down and accumulating cash hoards to thwart off anyone upsetting the apple cart and disrupting the plan..

 

As I and others have said for 3-5 years, the working class/middle class will/can expect less in wages, little chance of decent pensions, trimmed or self paid health plans, maybe still some 401s;? But with less contribution from the sponsor...Longer hours at minium OT pay and other side benefits slowly disappearing....The new normal for the working masses of America.

Strangely probably will have little effect on the working poor, but more so on the middle...Alas, the old mantra of the Rich getting richer will hold true and prosper...  

Nov 13, 2012 12:27PM
avatar
We are up, however, be cautious, we saw this yesterday...Beware of sucker's rallies...Things down here will remain shaky until this fricking fiscal cliff is avoided...Be careful...More later.
Nov 13, 2012 11:48AM
avatar

I'm always a pessimist and I think the economy will take about 4 more years to recover completely, HOWEVER, this recovery in GDP will not necessarily mean the job market will be at the same level as prior to the recession.

In each successive recession the "native" unemployment has steadily risen.  Called "jobless" recoveries.  The new native unemployment could very well be at over 6% unemployment as the new basis.  Those who recover and accelerate their earnings will continue to do well and reflect more of the "new" GDP.  Consolidations of industries and job efficiencies will continue to reduce the need for a larger labor force in this expansion.

Nov 13, 2012 10:17AM
avatar
You know me too well stric......

And I'm certainly not trying to compare little ole me to the great VF!  And like I said yesterday, my pocketbook and my wife (is there a difference?) sure hopes he's right.  I'm hoping for the opportunity to sell and relocate in 3-5 years.

All I'm pointing out is the way the math is calculated, I see his prediction as being hard to wrap my head around.  That's all.

Nov 13, 2012 10:14AM
avatar

Shaping up into another stinker down here....For the umpteenth time people, Wall Street does not trust Obama at all, he didn't do anything for 4 years but made us the laughing stock of the world, and what makes anyone think he will do anything positive the next four...He is a socialist, a marxist, the market already showed its displeasure last week and seems like this week wont be any different....Again, you can fool the people, you cant fool the markets....Be very careful and play it very safe...Will update throughout the day.

Nov 13, 2012 9:46AM
avatar
Too Sick 2 Swag
 I still see VF's prediction from yesterday that within a 2 year span we could see the GDP increase surpass the debt increase as very wishful thinking.
-------------------------------------------------------------
I certainly hope your not attempting to compare VF's track record of predictions against your own?
VF gives well thought out answers based on logic.... Anybody here with prior military exposure knows what SWAG stands for. (Scientific Wild Azz Guess).
If you dont believe me, google it...
Nov 13, 2012 9:32AM
avatar

GDP as currently constituted and reported allows for an outrageous amount of tampering by governments as a direct result of how it is denominated.  I would love to see GDP denominated in something that is utterly invariant within our rational governmental lifetime; say, square meters of solar energy flux at the equator.  This is a unit that we cannot "print" nor can we temporarily disrupt its equivalence (such as we can with barrels of oil, gallons of gasoline, or for that matter ounces of gold) and thus would provide us with a hard statistical base that could not be gamed.


Unfortunately we do not denominate our alleged economic output in something of that sort, although we could choose to.  As a result we wind up with articles similar to that in Bloomberg this morning where various pundits tell us that we "must not" do what Japan did (as they tell it, be "too timid") or what Europe did (as they tell it, stop deficit spending) lest we "suffer."


Note that nowhere in that discussion is an admission of the truth that we have been living a lie for decades.  We have presented to the world and operated in our lives as if actual economic output and demand that did not exist did; we have silently and through conspiracy and personal act stolen the accumulated wealth of both our nation and her people, expending it as if there was some limitless font from which we could draw, much like we attempted to do with oil in the ground even though we knew decades ago that the cost of extraction would rise and the cheap oil would all be burned up.  Now we're playing the same game with "fracking" and natural gas, with pundits by the hundreds or thousands (most with something to sell you, of course) telling us that a "new golden age of energy" is here in America, without bothering to mention that mathematically when you withdraw something from a finite reservoir at 10x the rate it only lasts 1/10th as long.

Nov 13, 2012 9:23AM
avatar
The way we calculate GDP has always been misleading.

Although even using the imperfect formula, I still see VF's prediction from yesterday that within a 2 year span we could see the GDP increase surpass the debt increase as very wishful thinking.

Nov 13, 2012 8:45AM
avatar
Some good tidbits this morning over at that "looking for alpha" site - although some are pretty D&G, with a few predictions that we'll test the 2009 market lows in the next year or two.  That would be a 50% drop in stocks!

There were a couple of interesting points related to inflation and GDP.  It does seem inconsistent that while food and energy costs are left out of the core inflation number, they are included when calculating GDP.  Someone also makes the argument that GDP should be adjusted for population growth, which makes a lot of sense.  If GDP increases 10% at the same time our population growth increases by 20%, we're really moving backwards.

Nov 13, 2012 8:42AM
avatar

The State of Texas has apparently petitioned to cede from the United States. The request came in the form of a petition with some 36,000 signatures, originating from Arlington.

 

Arlington is a city in , () within the metropolitan area. According to the 2010 census results, the city had a population of 365,438.

 

That means just under 10% of ONE city in a super big state is making the request... or the collective congregation of one of those wierdo-churches or klan-like sects that live on Kool Aid and ammo. The request says they will form their own currency. Texas- exists solely because of its Homestead Act. A Texan's home is his fortress. Until the late 1990's the 1865 Credit Act was still valid-- "one shall ride President style in the collection wagon and may commence firing upon glint of steel from a door or window...". Texas credit paper was trash until it was revised. Since the latter 1990s, Texas has accummulated businesses from around the country and exhausted all of it's resources. This is not a self-sustaining place. The world needs destressing. Eliminating the stress is the key. False money hoarding appears to be at the core and a false sense of hoarder over every man, woman and child.

 

We can keep fooling ourselves, or collapse the Dollar and order a new currency, exchanged on an individual basis with proof. If we set a threshold-- say- less than $500,000 and exchange it without massive audit, the core of the nation revives and recovery begins. Above that figure- YOU PROVE IT BEYOND A SHADOW OF A DOUBT. We would recall the Debt Notes, End the Fed, Reconcile Banks, Eliminate Banksters and Dissolve Wall Street in the process. Fully 9/10 of the paper and button pusher professions go down too. It's supposed to be currency, let's restore it to where it is supposed to be and progress.   

Nov 13, 2012 8:21AM
avatar
Wall Stret is only worried about itself!! It is in manipulation mode to drive down stock prices and take gains away for 2012 no matter what happens.
Nov 13, 2012 7:47AM
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good point (as always) VF - we have created an "inflation fighting" component including REITS (real estate), gold miners mutual fund, a commodities fund and TIPS.  bring it on ....
Nov 13, 2012 6:38AM
avatar

actually it was a something day for we that short the market during severe downturns (or the likelihood thereof).  it was a good day for some to add to bearx, ryirx and efu as we teetered on the brink of dropping thru the 200 DMA ....

 

look out below? 

 

this is not investment advice - see your financial advisor before making any investment decisions.

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