March 28, 2024

Fiscal Talks Move Shares Higher

Shares on Wall Street rose in light trading on Monday as investors seemed encouraged by signs of movement on negotiations in Washington to avoid a fiscal crisis.

Speaker John A. Boehner edged slightly closer to President Obama’s primary demands as they try to avert the tax increases and spending cuts that are set to take effect in the new year.

Mr. Boehner’s latest offer would extend low tax rates for everyone who has earned less than $1 million, and rates would rise for wages above that. But Mr. Boehner’s new positions were still far from those held by Mr. Obama.

“It does solidify that a deal is very close and it could be announced by the end of this week,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. “We could be surprised. We could actually have a Santa gift that a deal has been reached.”

Uncertainty over when and if a federal budget deal would be reached has kept investors cautious in what is normally a quiet trading period heading into year-end.

Investors are worried that the economy could slide back into recession if the full brunt of the tax and spending changes are allowed, though most expect a deal will eventually be reached.

“The universal feeling is still that this will probably be solved,” but it might take until the last minute, said Ryan Detrick, senior technical strategist at Schaeffer’s Investment Research in Cincinnati.

The market shrugged off Monday’s less cheery economic data that showed manufacturing activity in the New York region declined for a fifth month in a row in December.

In afternoon trading, the Standard Poor’s 500-stock index was up about 0.9 percent, and the Dow Jones industrial average was up about 0.6 percent. The Nasdaq composite was 0.9 percent higher.

If the S.P. 500 sustains its gains through the session, the index would snap a two-day losing streak. Despite the uncertainty of “fiscal cliff” talks, the S.P. 500 has performed well in the last month, grinding higher in mostly light volume.

Mr. Detrick said markets were likely to continue that sort of momentum through the end of the year, which is typically a bullish time for stocks.

Apple’s shares were about 0.5 percent lower after Citigroup cut its rating to “neutral” from “buy” and slashed its price target to $575 from $675. Apple shares have tumbled nearly 30 percent in about three months, losing 3.8 percent on Friday alone, helping lead the overall market lower.

The company said it sold more than two million iPhone 5 smartphones in China in the three days after its introduction there on Friday, but the figures did not ease worries about stiffer competition.

Sprint Nextel raised its offer for Clearwire, the wireless service provider, by 7 cents a share to buy the rest of the company that it did not already own for $2.2 billion. Clearwire tumbled more than 12 percent, while Sprint was flat.

The American International Group may raise as much as $6.5 billion from the sale of its remaining stake in the AIA Group, exiting a business it started nearly 100 years ago. A.I.G. was up 2.3 percent.

Article source: http://www.nytimes.com/2012/12/18/business/daily-stock-market-activity.html?partner=rss&emc=rss

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