Markets ended lower for the second consecutive day as
Republicans and Democrats continued to debate the Fiscal Cliff
issue. Meanwhile, President Barack Obama once gain emphasized on
increasing the tax rates for rich Americans. Industrial sector
was the biggest gainer, whereas utilities lost the most among the
S&P 500 industry groups.
The Dow Jones Industrial Average (DJI) lost 0.1% to close the day
at 12,951.78. The Standard & Poor 500 (S&P 500) dropped
0.2% to finish yesterday's trading session at 1,407.05. The
tech-laden Nasdaq Composite Index shed 0.2% to end at 2,996.69.
The fear-gauge CBOE Volatility Index (VIX) gained 2.9% to settle
at 17.12. Consolidated volumes on the New York Stock Exchange,
American Stock Exchange and Nasdaq were roughly 5.86 billion
shares, significantly lower than the daily average of 6.48
billion shares. Declining stocks beat advancers on the NYSE; as
for 49% stocks that declined, 47% stocks moved higher.
Benchmarks ended in negative territory for the second consecutive
day. Lack of progress on the Fiscal Cliff issue gave investors no
reason to place their bets yesterday. Stocks oscillated between
small gains and losses on Tuesday. Over the past few days,
markets have been moving on the basis of developments regarding
ongoing negotiations about the Fiscal Cliff.
Republicans had proposed raising $800 billion in additional tax
revenue. The plan also included reducing $600 billion from health
care programs and cutting $300 billion from both other mandatory
spending and discretionary spending. Last week, Republicans
rejected Treasury Secretary Timothy Geithner's proposal of
raising tax revenues by $1.6 trillion over the next 10 years. If
Congress fails to seal a deal on the issue, then it will take
effect in less than four weeks and most likely cause another
recession.
Yesterday President Obama rejected the Republican plan about the
Fiscal Cliff. Last week, Republicans had rejected President
Obama's plan and proposed a new plan. Obama called the Republican
plan as "out of balance" and insisted on increasing tax rates for
rich Americans. Obama said: "We're going to have to have higher
rates for the wealthiest". He also said that no deal will be
reached until Republicans agree to increase tax rates for rich
Americans.
President Barack Obama is scheduled to meet corporate chief
executives on Wednesday to discuss the issue. Corporate chief
executives are also looking for a decrease in tax rates for their
companies. The CEO of Boeing Company (NYSE:
BA
) will head the group and he said that they want "a balanced
solution to the nation's fiscal cliff and long-term deficit and
debt issues ... including meaningful and comprehensive tax and
entitlement reforms".
Coming to the sectors, Industrial Select Sector SPDR (XLI) gained
0.4% and was the biggest gainer among the S&P 500 industry
groups. Looking at XLI's top ten holding companies, General
Electric Company (NYSE:
GE
), United Technologies Corporation (NYSE:
UTX
), United Parcel Service, Inc. (NYSE:
UPS
), Deere & Company (NYSE:
DE
) and Emerson Electric Co. (NYSE:
EMR
) surged 0.2%, 0.4%, 1.1%, 0.3% and 0.3%, respectively.
The Utilities SPDR (XLU) was the biggest loser among the S&P
500 industry groups. Stocks such as Exelon Corporation (NYSE:
EXC
), Public Service Enterprise Group Inc. (NYSE:
PEG
), The Southern Company (NYSE:
SO
), Entergy Corporation (NYSE:
ETR
) and PPL Corporation (NYSE:
PPL
) lost 1.0%, 0.4%, 0.6%, 0.7% and 0.4%, respectively.
BOEING CO (BA): Free Stock Analysis Report
DEERE & CO (DE): Free Stock Analysis
Report
EMERSON ELEC CO (EMR): Free Stock Analysis
Report
ENTERGY CORP (ETR): Free Stock Analysis
Report
EXELON CORP (EXC): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis
Report
PUBLIC SV ENTRP (PEG): Free Stock Analysis
Report
PPL CORP (PPL): Free Stock Analysis Report
SOUTHN COMPANY (SO): Free Stock Analysis
Report
UTD PARCEL SRVC (UPS): Free Stock Analysis
Report
UTD TECHS CORP (UTX): Free Stock Analysis
Report
To read this article on Zacks.com click here.
Zacks Investment
Research