Benchmarks ended in the red for the fifth consecutive day
after fears intensified that U.S lawmakers may not be able to
seal a deal on the Fiscal Cliff issue before January 1. The Dow
Jones logged its longest five-day decline since July. Meanwhile,
the pending home sales index jumped to its highest level in two
and half years. All ten of the S&P 500's industry groups
closed in the red and the energy sector emerged as the biggest
CHEVRON CORP (CVX): Free Stock Analysis
MARATHON OIL CP (MRO): Free Stock Analysis
PETROBRAS-ADR C (PBR): Free Stock Analysis
SUNCOR ENERGY (SU): Free Stock Analysis
EXXON MOBIL CRP (XOM): Free Stock Analysis
To read this article on Zacks.com click here.
The Dow Jones Industrial Average (DJI) lost 1.2% to close the day
at 12,938.11. The Standard & Poor 500 (S&P 500) shed 1.1%
to finish Friday's trading session at 1,402.43. The tech-laden
Nasdaq Composite Index slipped 0.9% to end at 2,960.31.The
fear-gauge CBOE Volatility Index (VIX) jumped a whopping 16.7% to
settle at 22.72. Consolidated volumes on the New York Stock
Exchange, American Stock Exchange and Nasdaq were roughly 4.46
billion shares, considerably lower than the daily average of 6.48
billion shares. Declining stocks easily outpaced advancers on the
NYSE; as for 66% stocks that fell, only 31% stocks moved higher.
Benchmarks opened lower on Friday and were in negative territory
throughout the day. But losses accelerated before the closing
bell after President Barack Obama refrained from making any fresh
proposals on the Fiscal Cliff issue when he met Congress leaders.
Investor apprehensions about the Fiscal Cliff issue had dragged
the benchmarks lower in the previous week, overshadowing a number
of encouraging domestic reports. The Dow Jones declined 1.9%,
S&P 500 lost 1.9% and Nasdaq shed 2.0% over the week.
President Barack Obama met Congressional leaders on Friday to
find a solution to the Fiscal Cliff dilemma before January 1.
However, they failed to reach an agreement yet again. President
Obama did not offer any new proposals and both Republicans and
Democrats were still not ready to compromise. The Fiscal Cliff's
effects will be felt from Tuesday if Congress fails to resolve
the issue before the deadline.
After the meeting with Congressional leaders President Obama
said: "I'm modestly optimistic that an agreement can be achieved.
Nobody is going to get 100 per cent of what they want, but let's
make sure that middle-class families and the American economy -
and, in fact, the world economy - aren't adversely impacted
because people can't do their jobs." The House will meet again on
Sunday evening in a final effort to resolve the Fiscal Cliff
Investors once again ignored another promising report from the
housing sector. According to the National Association of
Realtors, pending home sales increased in November for the third
consecutive month. According to the report, pending home sales
index increased 1.7% to 106.4 in November from the revised
October figure of 104.6. This is below the consensus estimate of
an increase of 2.0%. According to Lawrence Yun, chief economist
of NAR, "Even with market frictions related to the mortgage
process, home contract activity continues to improve. Home sales
are recovering now based solely on fundamental demand and
favorable affordability conditions."
Meanwhile, the Chicago business barometer increased in December
to 51.6 from November figure of 50.4, beating consensus estimates
of 51. According to the report the Chicago business barometer
received a boost from an increase in New Orders. However, five
out of seven business activity indexes decreased in December.
Additionally, the Employment index has touched its lowest level
in three years.
The energy sector was the biggest loser among the S&P 500
industry groups and the Energy Select Sector SPDR (XLE) lost
1.7%. Stocks such as Exxon Mobil Corporation (NYSE:
), Chevron Corporation (NYSE:
), Marathon Oil Corporation (NYSE:
), Petroleo Brasileiro Petrobras SA (NYSE:
) and Suncor Energy Inc. (NYSE:
) shed 2.0%, 1.9%, 1.7%, 1.0% and 1.4%, respectively.