Stocks on Wall Street closed lower on Tuesday, as fears about fiscal battles in Washington and the troubles in Greece tipped major indexes from gains to losses throughout the day. A surge in shares of Home Depot prevented a steeper drop for the Dow Jones industrial average.
The Dow closed down closed down 58.90 points, or 0.5 percent, at 12,756.18. It would have been lower without support from Home Depot, whose stock jumped 3.6 percent after the company beat expectations for its fiscal third-quarter earnings. Home Depot is benefiting from the gradual housing recovery and rebuilding efforts after Hurricane Sandy. Its stock rose $2.22 to $63.38.
Stocks had opened lower after European leaders postponed the latest aid package for Greece. The Dow turned positive in the first hour of trading and rose solidly through the morning, gaining as much as 83 points. Starting around 2 p.m., the average slid steadily into the red.
Other indexes also closed lower. The Standard Poor’s 500-stock index lost 5.50 points, or 0.4 percent, to 1,374.53. The Nasdaq composite index fell 20.37 points, or 0.7 percent, to 2,883.89.
Investors are trading against the backdrop of federal spending cuts and tax increases that will take effect automatically at the beginning of next year unless United States leaders reach a compromise before then.
Worries about this possibility pushed United States stocks to one of their worst weekly losses of the year last week after voters re-elected President Obama and a deeply divided Congress. Mr. Obama met on Tuesday with labor leaders and others who advocate higher taxes on the wealthy and want to protect health benefits for seniors and other government programs. The president will meet with business leaders Wednesday.
“The longer we sit and do nothing” about the nation’s fiscal issues, “the more this market is going to oscillate between positive 40 and negative 60, until we know what’s going to happen next with all this uncertainty,” said Craig Johnson, senior technical research strategist with Piper Jaffray Company in Minneapolis.
Mr. Johnson says he expects the S. P. 500 to climb to 1,550 in the next six months as investors get over their lingering unease from the recent recession and companies understand better how government policy on taxes, health care and spending will affect them.
European stocks had been lower but rose after trading opened in New York. Benchmark indexes in France, Britain and Germany closed modestly higher.
Traders in Europe are concerned because finance ministers, in a surprise, postponed $40 billion in aid desperately needed for Greece. A day earlier, there was word that leaders had prepared a positive report on Greece, making it appear likely that the aid would be released.
“It’s a little bit like ‘Groundhog Day,’ ” said Nicholas Colas, chief market strategist at the ConvergEx Group, referring to the movie whose protagonist, played by Bill Murray, must relive the same day over and over. Until there is decisive news from Washington or Brussels, neither of which appears imminent, markets will remain vulnerable to short-term swings caused by headlines, Mr. Colas said.
The next major catalysts for a market move, he said, will be gauges of spending by consumers on the traditional shopping rush on the day after Thanksgiving.
The Treasury’s benchmark 10-year notes rose 7/32, to 100 9/32, while the yield slid to 1.59 percent, from 1.61 percent late Friday, as demand increased for ultrasafe investments. The United States bond market was closed on Monday in observance of the Veterans Day holiday.
Article source: http://www.nytimes.com/2012/11/14/business/daily-stock-market-activity.html?partner=rss&emc=rss
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