Stocks on Wall Street were trading lower Friday morning after a media report that White House officials were in discussions that could lead to increased flexibility to negotiate on coming government spending cuts. The White House had no comment on the report.
The Standard Poor’s 500-stock index was down 0.4 percent, the Dow Jones industrial average was 0.4 percent lower, and the Nasdaq composite index lost 0.5 percent.
Investors have been concerned that if no deal was reached on the large, automatic budget cuts and tax increases set to begin next year, the economy could slip into recession. The S.P. 500 is down 4.3 percent over the past two weeks.
“I have to believe the government will come to some kind of resolution, but every day that passes without any progress is another day where the path of least resistance will be down,” said Robert Pavlik, chief market strategist at Banyan Partners in New York.
Democrats and Republicans appeared to dig in their heels into opposing positions, echoing last year’s political impasse over raising the debt ceiling.
Jay Carney, President Obama’s press officer, told reporters the president wouldn’t sign, “under any circumstances, an extension of tax cuts for the top 2 percent of American earners,” while Mitch McConnell, the Senate Republican leader, said Republicans won’t raise tax rates. President Obama and Congressional leaders were to meet for budget and tax talks Friday morning.
Concerns over the budget have pressured stocks ever since the Nov. 6 presidential election, and the S.P. 500 was on track to notch a second straight week of losses of more than 1 percent.
Going into Thursday, the S.P. was down 1.9 percent for the week, while the Dow was off 2.1 percent and the Nasdaq down 2.3 percent.
While the S.P. 500 remained up 7.6 percent for the year, what had looked like a stellar 2012 for stocks has turned into merely an average year. Though some investors have become more inclined to protect their gains as 2012 draws to a close, others view the decline as a buying opportunity.
“I think we’re closer to the end of this decline than to the beginning, and valuations are becoming extremely attractive,” Mr. Pavlik said. “If you’re not putting a buying list together, you’re doing yourself a disservice.”
A flare-up in violence in the Middle East added to market unease as Israeli warplanes bombed targets in and around Gaza city for a second day, while two rockets fired from the Gaza Strip targeted Tel Aviv.
In Europe, stocks were generally down, with British stocks off about 0.7 percent and German shares lower by about 0.5 percent.
Article source: http://www.nytimes.com/2012/11/17/business/daily-stock-market-activity.html?partner=rss&emc=rss