As Budget Talks Continue, Markets Change Little

Stocks closed little changed Tuesday on Wall Street as budget talks continued in Washington.

The Dow Jones industrial average closed down 13.82 points, or 0.11 percent, at 12,951.78 after trading in a range of 82 points. The Standard Poor’s 500-stock index was down 2.41 points, or 0.17 percent, at 1,407.05. The Nasdaq composite index was down 5.51 points, or 0.18 percent, at 2,996.69.

Investors are waiting for developments on the budget talks, which are aimed at avoiding the government spending cuts and tax increases that would begin to arrive Jan. 1 and could eventually cause a recession.

President Obama said Tuesday that a proposal released on Monday by the House speaker, John Boehner, was “still out of balance.” Mr. Obama, in an interview with Bloomberg Television, insisted on higher taxes for wealthy Americans.

Republicans, led by Mr. Boehner, have balked at Mr. Obama’s proposal of $1.6 trillion in additional taxes over a decade, and called on Monday for increasing the Medicare eligibility age and lowering cost-of-living increases for Social Security benefits.

Among stocks making big moves, Darden Restaurants, owner of the Olive Garden, Red Lobster and LongHorn Steakhouse restaurant chains, fell $5.02, or 9.6 percent, to $47.40 after cutting its profit forecast for fiscal 2013.

Stock trading will probably become more volatile the longer talks go without a deal, J. J. Kinahan, chief derivatives strategist at TD Ameritrade, said.

Despite the lack of progress, the stock market has gained back nearly all of a postelection slide caused by concerns about the fiscal impasse.

The S. P. is now about 1.5 percent below its level on Nov. 6. In mid-November it was down as much as 5 percent.

Bill Gross, the managing director of the fund manager Pimco, told investors that they should expect annualized bond returns of 3 to 4 percent in the future and stock returns that are “only a few percentage points higher.”

The S. P. 500 has risen 12 percent this year. High debt and slowing global growth will weigh on the economy, Mr. Gross said.

Interest rates were flat. The Treasury’s benchmark 10-year note rose 5/32, to 100 6/32 and the yield slipped to 1.60 percent from 1.62 percent late Monday.

Among other stocks making big moves, Big Lots, the discount retailer, gained $3.23, or 11.5 percent, to $31.27 after raising its full-year earnings forecast and reported a loss that was not as bad as analysts had expected.

Pep Boys fell $1.11, or 10.4 percent, to $9.57 after posting a loss on weak sales and rising costs at its auto stores.

MetroPCS fell 81 cents, or 7.5 percent, to $9.96 after Reuters reported that Sprint is not considering making a counteroffer for the cellphone business. MetroPCS and T-Mobile said in October that they had agreed to combine their businesses.

Article source: http://www.nytimes.com/2012/12/05/business/daily-stock-market-activity.html?partner=rss&emc=rss