Stocks pull back on debt ceiling worries
The Dow falls 51 points as investors glumly watch Congress. Also weighing on markets are profits after last week's rally. Amazon.com hits an all-time high.
Like it or not, the debt ceiling issue/crisis/tragedy/comedy was one reason the stock market was lower Monday and will almost certainly be at least a low-level source of annoyance over the next few weeks. The problem, as the Bipartisan Policy Center noted, is that the government has until March 1, probably no later, to agree on how to deal with the nation's debt ceiling limit. Until then, the Treasury can scramble around to pay the government's bill. A move it could make is to delay tax refunds, which won't be popular.
Worst of all, no one is talking about much of anything. Republicans want cuts, particularly in entitlements (read Social Security and Medicare) and elsewhere but won't detail specific proposals. Democrats don't want to deal with entitlements and believe the real Republican agenda is to end government as we know it. But they don't appear to have a plan of their own.
There's talk -- not much more than that -- about minting a $1 trillion platinum coin and sticking that in the Federal Reserve Bank of New York to delay the inevitable. But that's talk. Traders don't believe it. Platinum was off $2.20 to $1,556.30 an ounce in New York on Monday, although it's up 1% since Dec. 31.
So, the Dow Jones industrials ($INDU) closed down 51 points to 13,384. The Standard & Poor's 500 Index ($INX), which hit a five-year high on Friday, fell 5 points to 1,462, and the Nasdaq Composite Index ($COMPX) fell 3 points to 3,099. The Russell 2000 Index ($RUT), which tracks small-cap stocks, was off 3 points to 876.Three other factors were involved in the day's pullback.
- Profit-taking after last week's big rally, the best since November 2011.
- Worries about fourth-quarter corporate profits. The earnings season starts after Tuesday's close with aluminum giant Alcoa (AA).
- A $10 billion settlement between the government and 10 of the largest mortgage servicers over foreclosure-abuse claims. Among those signing on to the deal are the largest: JPMorgan Chase (JPM), Bank of America (BAC) and Citigroup (C). The lenders agreed to $5.2 billion in mortgage assistance and $3.3 billion in direct payments.
McDonald's (MCD) was the Dow leader, up $1.06 to $90.91, followed by Verizon Communications (VZ), which said its Verizon Wireless service added 2.1 million subscribers in the fourth quarter, more than expected. Shares rose 39 cents to $44.69.
Walt Disney (DIS) was the laggard, down $1.22 to $50.97 on reports it's looking for cost cuts and may consider layoffs. Boeing (BA) fell $1.56 to $76.13 after an electrical fire broke out in a 787 Dreamliner parked at a gate in Boston.
Amazon.com (AMZN), MasterCard (MA), Visa (V) and Alaska Air (ALK) hit all-time highs during the day. Amazon rose after an upgrade from Morgan Stanley and Macquarie Securities.
Health care and telecom stocks were the leaders on the day. Utility and energy stocks were the laggards.
Crude oil (-CL) was up 10 cents to $93.19 a barrel in New York. Gold (-GC) fell $2.60 to $1,646.30 an ounce. Interest rates were down slightly, with the 10-year Treasury yielding 1.903%, down from Friday's 1.915%.
i agree that we need to cut and control spending, especially getting rid of waste and fraud in our programs (and this includes the military as well, I saw it first hand when I was in the Air Force). So to a degree I agree with the Republicans that enough hasn't been done in this area, but why does it always come down to this with the GOP (from this article):
"Republicans want cuts, particularly in entitlements (read Social Security and Medicare) and elsewhere but won't detail specific proposals"
Why does the GOP go after these programs so hard, when they in fact have their own source of funding (payroll taxes and Part B monthly premiums)? The GOP never talks about Pentagon spending, Farm Subsidies (which go primarily to large farm corporations in red Farm Belt states) or taxpayer subsidized crop insurance, tax credits to oil companies which frequently report record profits, aid to Israel, etc.
The GOP has picked up the label of only supporting the wealthy, and wealthy people don't need SS or Medicare, so is the GOP attitude one that says if the wealthy don't need it, no one does?
A copy/paste from another article in today's MSN Money page:
"....the end of the temporary two-year reduction in an employee's share of payroll taxes (from 6.2% to 4.2% of covered payroll) removes a linkage between Social Security and broader government funding that program defenders are glad to see. They want Social Security to be treated independently of broader deficit discussions. The program, they note correctly, has never added a penny to federal spending deficits."
Decide for yourself, we need to cut spending, but let's be intelligent about how and where we do it.
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