June 24, 2024

Markets Try to Look Past Budget Deal

Stocks in the United States traded slightly lower on Wednesday as traders watched the latest offers in budget negotiations in Washington, while technology shares were lifted by strong results from Oracle.

In morning trading, the Standard Poor’s 500-stock index fell 0.2 percent, the Dow Jones industrial average lost 0.1 percent and the Nasdaq composite index slipped 0.1 percent. European shares were modestly higher in late trading.

The S.P. 500 was on track to extend its best two-day run in a month, a sign that investors were trying to look past the combination of tax increases and spending cuts that many experts fear could push the economy into recession if they take effect next year.

President Obama’s most recent offer to Republicans made concessions on taxes and social programs spending, amid concerns from Senate Democrats. House Speaker John Boehner said he remained hopeful about an agreement, though the offer was “not there yet.”

“Both Obama and Boehner have been making concessions, suggesting a deal will get done before the deadline, resulting in an acceleration in stock buying,” said Adam Sarhan, chief executive of Sarhan Capital in New York.

Tech shares will be in focus a day after Oracle reported earnings that beat expectations on strong software sales growth. Shares rose 2.7 percent.

FedEx reported second-quarter revenue that beat expectations, but said its earnings in the quarter had been impacted by Hurricane Sandy. Shares rose 1.3 percent.

The S.P. has gained 2.3 percent over the last two sessions, the first time it has notched two straight days of 1 percent gains since July. Markets have been supported by any indication agreement might be reached, with banks and energy shares — groups that outperform during periods of economic expansion — leading gains.

“We’ve been breaking above levels of resistance, including the 50-day moving average and the November high, so from a technical standpoint, we’re seeing a lot of improvement,” Mr. Sarhan said. “We’re set up for a strong 2013.”

Trading volume has been light ahead of the holidays and as some caution remains over the budget negotiations. Equities have struggled to gain ground in recent weeks amid signs there was little room for compromise between the two political parties.

The Knight Capital Group climbed 4.1 percent after it agreed to be bought by Getco Holdings in a deal valued at $1.4 billion. The stock, which was devastated by a near-fatal trading error in August, remains down about 76 percent so far this year.

General Mills reported earnings that beat expectations and raised its full-year profit view, citing a recent acquisition which lifted sales. Shares gained 1.5 percent.

Housing starts fell 3 percent in November, impacted by Hurricane Sandy.

Article source: http://www.nytimes.com/2012/12/20/business/daily-stock-market-activity.html?partner=rss&emc=rss

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