Apprehension about this week's "fiscal cliff" discussion
between top U.S. leaders and President Barack Obama led to
benchmarks ending flat. Trading volumes were light owing to the
Veteran's day holiday. Meanwhile, China's export growth jumped to
a five-month high. The healthcare sector was the major gainer,
while utilities remained the biggest loser among the S&P 500
The Dow Jones Industrial Average (DJI) ended flat, dropping
merely 0.31 point to close the day at 12,815.08. The Standard
& Poor 500 (S&P 500) was up 0.01% and finished
yesterday's trading session at 1,380.00. The tech-laden Nasdaq
Composite Index slipped 0.02% to end at 2,904.25. The fear-gauge
CBOE Volatility Index (VIX) dropped 1.9% to settle at 16.68.
Consolidated volumes on the New York Stock Exchange, American
Stock Exchange and Nasdaq were roughly 4.62 billion shares,
significantly lower than the daily average of 6.52 billion
shares. Declining stocks outpaced the advancers on the NYSE; as
for 51% stocks that fell, 45% stocks moved higher.
Benchmarks had ended sharply lower in the previous week and
they failed to recover from those losses on the first trading
session of this week. Last week, investors' sentiment was largely
affected by the fiscal cliff dilemma and concerns over the Euro
zone debt crisis. Trading volumes were low yesterday as the U.S.
bond market was closed and many traders were absent from
proceedings due to the holiday. Meanwhile, problems with the NYSE
Euronext meant that trading activities in more than 200 stocks
had to be postponed.
Investors now expectantly await Friday's meeting between top
Republican and Democratic leaders, who will be discussing ways
and means to avoid the impending fiscal cliff. President Barack
Obama is scheduled to hold a discussion with labor and civic
leaders on Tuesday and with business executives on Wednesday.
According to a Whitehouse official, the leaders will discuss "the
best ways to move our economy forward and find a balanced
approach to reduce the deficit". Earlier, Barack Obama had said:
"I'm not wedded to every detail of my plan. I'm open to
compromise, I'm open to new ideas, I'm committed to solving our
fiscal challenges, but I refuse to accept any approach that isn't
According to experts and the Congress Budget Office, the
fiscal cliff of $600 billion in tax increases and the government
spending needs to be successfully negotiated; otherwise it could
result in another recession. If Congress doesn't take necessary
steps about the impending fiscal cliff, then the resultant tax
increases and the decrease in government spending will take
effect from the beginning of next year. This will decrease the
trade deficit, but will dent the pace of growth of the U.S.
On the international front, China, the world's second largest
economy, witnessed 11.6% increase in exports in October from the
previous month's 9.9% jump. The rate of imports remained flat
month on month at 2.4% in October. Meanwhile, Chen Deming,
Chinese Minister of Commerce, said: "The trade situation
will be relatively grim in the next few months and there will be
many difficulties next year". He also said that due to weak
global demand and increasing operating costs, Chinese exporters
will face difficult conditions in the coming days.
The healthcare sector was the major gainer among S&P 500
industry groups and the Health Care SPDR (XLV) surged 0.5%.
Stocks such as Abbott Laboratories (NYSE:
), Sanofi SA (NYSE:
), Watson Pharmaceuticals, Inc. (NYSE:
), Mylan Inc. (NASDAQ:
) and Endo Health Solutions Inc (NASDAQ:
) rose 0.1%, 0.3%, 0.2%, 0.6% and 3.0%, respectively.
The Utilities SPDR (XLU) lost 0.8% and remained the major
loser among S&P 500 industry groups. Stocks such as Exelon
), NextEra Energy, Inc. (NYSE:
), Genon Energy Inc (NYSE:
), Duke Energy Corp (NYSE:
) and Xcel Energy Inc (NYSE:
) tumbled 1.1%, 0.9%, 1.8%, 0.8% and 1.5%, respectively.
ABBOTT LABS (ABT): Free Stock Analysis Report
DUKE ENERGY CP (DUK): Free Stock Analysis
ENDO PHARMACEUT (ENDP): Free Stock Analysis
EXELON CORP (EXC): Free Stock Analysis Report
GENON ENERGY (GEN): Free Stock Analysis
MYLAN INC (MYL): Free Stock Analysis Report
NEXTERA ENERGY (NEE): Free Stock Analysis
SANOFI-AVENTIS (SNY): Free Stock Analysis
WATSON PHARMA (WPI): Free Stock Analysis
XCEL ENERGY INC (XEL): Free Stock Analysis
To read this article on Zacks.com click here.