Markets ended in the red after Senate Majority Leader Harry
Reid's discouraging comments about the "fiscal cliff"
overshadowed a number of positive economic reports. Additionally,
Greece's lenders concurred on providing additional aid to the
nation. Among the positive economic readings, consumer confidence
jumped to its highest level in more than four years. The
Utilities sector was the only gainer among the S&P 500
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The Dow Jones Industrial Average (DJI) declined 0.7% to close the
day at 12,878.13. The Standard & Poor 500 (S&P 500)
dropped 0.5% to finish yesterday's trading session at 1,398.94.
The tech-laden Nasdaq Composite Index shed 0.3% to end at
2,967.79. The fear-gauge CBOE Volatility Index (VIX) surged 2.7%
to settle at 15.92. Consolidated volumes on the New York Stock
Exchange, American Stock Exchange and Nasdaq were roughly 5.9
billion shares, significantly lower than the daily average of 6.5
billion shares. Declining stocks outpaced advancers on the NYSE;
as for 54% stocks that declined, 43% stocks moved higher.
Benchmarks began yesterday's trading session with a number of
positive news from both international and domestic fronts.
Markets traded almost flat through the day, but Harry Reid's
dismal comments on the fiscal cliff issue dragged benchmarks into
the red. This was the second consecutive day of losses after U.S
stocks enjoyed one of their best weekly gains last week.
Senate Majority Leader Harry Reid was unhappy about the lack of
progress regarding the fiscal cliff issue. He said that "little
progress" has been made to avoid the impending fiscal cliff. He
also said there were only a couple of weeks left to reach an
agreement and it was time to start discussing specifics.
The fiscal cliff of $600 billion in tax increases and government
spending cuts is slated to take effect from the beginning of 2013
if Congress fails to reach a deal.
Meanwhile, the White House said President Barack Obama is
scheduled to meet business leaders of bellwether companies
including Goldman Sachs Group, Inc. (NYSE:
) and Caterpillar Inc. (NYSE:
) on Wednesday to discuss the impending fiscal cliff issue.
According to a New York Times report, Obama will also meet select
small business owners and middle class tax payers in the coming
On the international front, Greece's international lenders met in
Brussels on Monday to discuss its debt situation. It was their
third meeting on the same issue and they have now finally reached
an agreement. According to Eurogroup Chairman Jean-Claude
Juncker, Greece will get its next loan installment on December
13. They have also agreed to reduce Greece's debt by more than 40
billion euros and estimate debt will fall to 124% of the gross
domestic product by 2020. After the meeting, Greece Prime
minister Antonis Samaras said: "Tomorrow a new day begins for all
Meanwhile, consumer confidence surged in November and touched its
highest level in more than four years. Consumer confidence
increased to 73.7 in November from October's reading of 73.1.
This was above consensus estimates of 72.0. The Present Situation
Index increased to 56.7 from 56.6, whereas the Expectation Index
jumped to 85.1 in November from the previous month's figure of
Separately, the S&P Dow Jones Indices released the
S&P/Case-Shiller Home Price Indices, which noted a 0.3%
increase in average home prices for both the 10- and 20-City
Composites in September from the previous month. According to the
report, the national composite rose 3.6% in the third-quarter as
against the previous year third-quarter. Thirteen out of the
twenty cities posted monthly gains.
The U.S. Department of Commerce reported a marginal increase in
durable goods orders in October. According to the report, new
orders increased to 216,948 from September's figure of 216,900.
This was in sharp contrast to consensus estimates of a fall of
0.7%. Excluding defense and transportation, new orders increased
0.1% and 1.5%, respectively. News orders have increased for five
months out of the last six months.
As for the sectors, Utilities finished in the green for the
second consecutive day and the Utilities SPDR (XLU) gained 0.3%.
Stocks such as Exelon Corporation (NYSE:
), Public Service Enterprise Group Inc. (NYSE:
), FirstEnergy Corp. (NYSE:
), NRG Energy Inc (NYSE:
) and Genon Energy Inc (NYSE:
) surged 1.5%, 0.2%, 0.5%, 2.3% and 2.5%, respectively.