Stocks inch lower as investors wait on budget


Share
Posted Online: Nov. 30, 2012, 5:51 pm
Comment on this story | Print this story | Email this story
NEW YORK (AP) — Stocks ended the week more or less where they started it. Investors were watching closely while lawmakers in Washington worked at thrashing out a budget agreement.

After inching 3.76 points higher on Friday, the Dow Jones industrial average closed at 13,025.58. That's a gain of just 16 points for the week, one of the Dow's smallest moves this year.

Along the way, the market had several sharp turns both up and down after key figures in the talks, such as House Speaker John Boehner and President Barack Obama, offered contrasting views about how well the talks were going.

The Standard and Poor's index edged up 0.23 point to 1,416.25. The index is up 0.5 percent for the week. The Nasdaq composite was down 1.79 points to 3,010.24. It gained 1.46 percent for the week.

The main driver for markets this week has been the talks between the White House and Congress over the "fiscal cliff," a series of sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit. Economists say that those measures, if implemented, could push the U.S. economy back into a recession.

Optimism that a deal will be done was greeted with rallies, while pessimistic comments from lawmakers were followed by sell-offs.

"Right now the market is just going to be held hostage as to what happens in the next five hours, versus what's going to happen in the next five years," said Dan Veru, chief investment officer at Palisade Capital Management, in Fort Lee, New Jersey.

President Obama argued Friday that allowing taxes to rise for the middle class would amount to a "lump of coal" for Christmas, while Boehner declared that negotiations to surmount a looming fiscal cliff are going "almost nowhere."

Speaking at a toy factory, the president said Republicans should extend existing Bush-era tax rates for households earning $250,000 or less, while allowing increases to kick in for the wealthy. On Capitol Hill, Boehner argued that Obama's latest offer — to raise revenue by $1.6 trillion over the next decade — would be a "crippling blow" to an economy that is still struggling to find its footing.

"My sense is that investors are going to be busy reading headlines every day for the next three weeks," said Jack Ablin, chief investment officer at BMO Group in Chicago.

Ablin says that he expects policy makers to reach a temporary agreement on the budget before year-end, before coming to a "Grand Bargain" next year. He believes improving consumer confidence and rising house prices will underpin the economy and support demand for stocks.

Stocks are higher for the year. The Dow is up 6.5 percent, the S&P 500 index 12 percent. The indexes are on track to end the month little changed.

Americans cut back on spending last month and saw no growth in their income, reflecting disruption from Superstorm Sandy that could hold back economic growth in the final months of the year.

The Commerce Department reported that consumer spending dropped 0.2 percent in October. That's down from an increase of 0.8 percent in September and the weakest showing since May.

The yield on the 10-year Treasury note was little changed at 1.62 percent.

Among stocks making big moves:

—Yum Brands, which owns KFC, Pizza Hut and Taco Bell, fell $7.39 to $67.08. The fast-food operator reported disappointing sales and earnings forecasts. An analyst recommended that investors sell the stock.

—Zynga, the maker of computer games including "Farmville" and "Cityville," fell 16 cents to $2.46 after the company said late Thursday that it was loosening its relationship with Facebook. While the deal frees Zynga from having to use Facebook as the exclusive social site for its games, the company relies on Facebook for most of the revenue it generates even as it works to establish its independence.

—VeriSign plunged $5.19 to $34.15 after the company announced the terms of its new contract to run the key directories that keep track of ".com" domain names. The company won't be allowed to raise prices on the registration of such names without government approval.

—Duke Energy rose $1.43 to $63.82 after the company said its CEO will step down as part of a settlement with the North Carolina utilities regulator that ends an investigation into the company's takeover of in-state rival Progress Energy.



















 



Local events heading








  Today is Thursday, Oct. 2, the 275th day of 2014. There are 90 days left in the year.

1864 -- 150 years ago: The ladies have adopted the fashion of wearing representations of insects in the flowers on their bonnets. Some look very natural.
1889 -- 125 years ago: T.F. Cary, former Rock Island alderman, has accepted a position as salesman for a Chicago wallpaper house and plans to move to that city.
1914 -- 100 years ago: Work on the new telephone building on 18th Street between 6th and 7th avenues is progressing rapidly.
1939 -- 75 years ago: Rock Island's new theater at 3rd Avenue and 19th Street will have a name significant of its location. The "Rocket" is scheduled to open Thanksgiving Day.
1964 -- 50 years ago: Two of Rock Island's newest water towers were vandalized last night, including the one at 38th Street and 31st Avenue, where police took five Moline boys into custody about 9 p.m..
1989 -- 25 years ago: Some of us who live in the Quad-Cities take the Mississippi River for granted, or at least we used to. But the river is not taken for granted by our visitors. And most Quad-Citians are realizing the importance of the river to this area as increased emphasis is placed on tourism.







(More History)