Monday's holiday-shortened trading session ended with losses
for the benchmarks as investors remained apprehensive about
lawmakers finding a solution to the "Fiscal Cliff". This was the
second consecutive day of losses for the markets after Boehner's
"Plan B" failed to garner ample support from his own party on
Thursday evening. The materials sector was the biggest gainer
while the energy sector was a major loser among the S&P 500
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The Dow Jones Industrial Average (DJI) lost 0.4% to close the day
at 13,139.08. The Standard & Poor 500 (S&P 500) shed 0.2%
to finish Monday's trading session at 1,426.66. The tech-laden
Nasdaq Composite Index slipped 0.2% to end at 3,012.60. The
fear-gauge CBOE Volatility Index (VIX) climbed 4.2% to settle at
17.84. Roughly 1.24 billion shares were traded on the New York
Stock Exchange. Declining stocks easily outpaced advancers on the
NYSE; as for 58% stocks that fell, only 38% stocks moved higher.
U.S. stocks closed their trading session at 1P.M. on Monday and
the Street was closed on Tuesday owing to the Christmas holiday.
Thus, trading volumes were also light. Investors remain unsure
whether the impending tax hikes and spending cuts can be avoided.
Their apprehension was further intensified after House of
Representatives Speaker John Boehner failed to gather ample
support to pass his "Plan B". The blue-chip index posted its
biggest drop on Friday in more than a month after the failure of
Boehner's "Plan B."
As for now, no major developments are expected to take place
before Thursday as President Barack Obama is away on a short
holiday break to Hawaii. President Barack Obama had said last
week that he is still hopeful that a deal will be sealed before
January 1 and will continue to work on a plan which will reduce
deficit in the long run. Obama said: "Even though Democrats and
Republicans are arguing about whether those rates should go up
for the wealthiest individuals, all of us - every single one of
us - agrees that tax rates shouldn't go up for the other 98
percent of Americans."
In the recent days we have seen that the Fiscal Cliff issue is
guiding the markets since investors are reacting in sync with
developments regarding this issue. Last week, the Bureau of
Economic Analysis had reported that personal spending increased
in November and the U.S. Department of Commerce reported that
orders for manufactured durable goods gained in November.
Investors chose to ignore these reports and focused on the Fiscal
However, the benchmarks are almost certain to have a winning
finish for the year. The Dow, S&P 500 and Nasdaq have so far
gained 7.5%, 13.4% and 15.6%, respectively, in 2012. The most
important factors that pushed the benchmarks higher in 2012 are
the recovery in the U.S. housing sector and a relatively better
employment conditions. The Federal Reserve's announcement of QE3
in September has also helped benchmarks to move higher.
The Materials Select Sector SPDR (XLB) gained 0.5% and was the
biggest gainer among the S&P 500 industry groups. Stocks such
as The Dow Chemical Company (NYSE:
), PPG Industries, Inc. (NYSE:
), Eastman Chemical Company (NYSE:
), FMC Corporation (NYSE:
) and Monsanto Company (NYSE:
) added 0.6%, 1.5%, 1.1%, 1.0% and 0.3%, respectively.
The Energy Select Sector had a bad run and the Energy Select
Sector SPDR (XLE) lost 0.6%. Stocks such as Exxon Mobil
), Chevron Corporation (NYSE:
), Marathon Oil Corporation (NYSE:
), Petroleo Brasileiro Petrobras SA (NYSE:
) and Suncor Energy Inc. (NYSE:
) shed 0.4%, 1.0%, 1.2%, 0.9% and 0.6%, respectively.