Dow Sinks, COMP Ends Winning Streak Amid Fears of Fiscal-Cliff Impasse

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The Dow Jones Industrial Average (DJI) ended near a session low, as escalating concerns about the fiscal cliff trumped encouraging economic data. Congressional leaders did little to help matters, with Senate Majority Leader Harry Reid (D-Nev.) admitting to "little progress" on Capitol Hill, while Republicans pointed the finger at politicking among Democrats. In addition, traders essentially shrugged off bailout progress across the pond, as well as reports of a record Cyber Monday. Against this backdrop, the S&P 500 Index (SPX) fell to psychological support, while the tech-rich Nasdaq Composite (COMP) snapped its six-session winning streak.

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The Dow Jones Industrial Average (DJIA) ended on a loss of 89 points, or 0.7%, to surrender its perch atop its 20-day moving average. Boeing ( BA ) led the seven advancing blue chips, adding 0.3%, while Hewlett-Packard ( HPQ ) paved the path lower with a 3% drop.

The S&P 500 Index (SPX) also finished near an intraday nadir, giving up 7.4 points, or 0.5%, to end just shy of the 1,400 level. Meanwhile, despite spending a healthy part of the day in the black, the Nasdaq Composite (COMP) eventually followed suit, shedding 9 points, or 0.3%.

The CBOE Market Volatility Index (VIX) tacked on 2.7%, thanks to an eleventh-hour rebound.

A Trader's Take

"There were slightly better-than-expected durable goods and consumer confidence readings this morning, but they didn't really spark too much interest from traders," said Schaeffer's Senior Equity Analyst Joe Bell. "This morning, we finally got a little good news out of Europe, as the International Monetary Fund and euro-zone finance ministers came to an agreement on Greek financing. The market reaction was mixed, as many participants are going to take a wait-and-see approach regarding this latest plan."

However, "while most broad-market indexes finished the day slightly lower," it wasn't a bleak session all-around. "The utilities and consumer staples sectors outperformed the market, as some participants rushed to safety," he said.

Economic and Earnings News

The S&P/Case-Shiller 20-city home price index improved 0.3% in September, or 0.4% on a seasonally adjusted basis. Year-over-year, the index was up 3% for the month. The data arrived right in line with consensus expectations.

Durable goods orders were flat at a seasonally adjusted $216.95 billion in October, reported the Commerce Department, as strength in machinery orders offset a lackluster showing for autos and planes. The report was stronger than forecast, as economists were bracing for a 1.2% drop.

The Conference Board's consumer confidence index edged up to 73.7 in November, modestly higher than October's upwardly revised reading of 73.1. The report was rosier than expected, as economists predicted a tamer reading of 73.0. The index is now docked at its highest level since February 2008.

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In the Options Pits


Oil futures caught an early boost from the Eurogroup's Greek debt accord, but the positive momentum didn't last long. Traders were spooked by reports of a fiscal-cliff gridlock on Capitol Hill, along with a bleak global growth forecast from the Organization for Economic Cooperation and Development (OECD). Crude for January delivery shed 56 cents, or 0.6%, to finish at $87.18 per barrel.

Gold futures continued to backpedal, as a stronger U.S. currency diminished the dollar-denominated commodity's appeal. December-dated gold ended on a drop of $7.30, or 0.4%, at $1,742.30 per ounce.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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