The S&P 500 closed higher by 2 points and the Dow was up 83 points while Apple dragged the NASDAQ down by 23 points. The market started off lower and held support before it hit daily resistance levels and sold off at the end of the day.
The fiscal cliff noise created a few moves in the market today. A headline crossed the wires that said some house Republicans were going to defect and back a U.S. tax compromise. This had a positive impact on the market as the S&P 500 spiked from a low of 1398 to an intraday high of just over 1415. When it was clear there was going to be no big news on the cliff issues the market backed off and the S&P closed at 1409.
Perhaps some clarity on one big component of the fiscal cliff became clearer today. The single largest component of the cliff is the middle class Bush tax rates. A number of sources were quoted today saying that if all else fails and there can be no great agreement the House will still pass a bill extending the Bush middle class rate. It is likely that the Senate and White House would sign off on this type of arrangement. Those that chose the kick the can down the road option in the office pool are likely to be the big winners.
The Chinese Shanghai Composite spiked by 2.87% overnight on huge volume. Here are some of the main factors driving markets there higher: the abolishment of a regulation on insurance companies’ investment limits in commercial banks, evidence that the property market may have bottomed, and that domestic demand will be spurred by a massive government sponsored drive to support urbanization.
Some domestic economic numbers were released today. October factory orders increased by 0.8% against a consensus estimate of a decline of 0.1%. The November ISM Services number came in at 54.7 –v- a consensus estimate of 53.7. The ADP employment report indicated that private payrolls increased by 118,000 in November even though Hurricane Sandy reduced payrolls by an estimated 89,000.
The financial sector was a market leader today. Citigroup announced a major restructuring and the stock rose dramatically, 6.33%, in response to the plan. Bank of America broke above a critical technical resistance level and broke out to recent highs and closed 5.66% higher.
Industrials traded well ahead of the tape on the good news from China. Names from every area of the sector were up sharply. General Electric, Cummins Inc., and exploration and construction names led the march higher.
Transports traded well today on the continued strength from the rails and truckers. Better shipments of coal and auto related components helped the rails.
Energy traded higher today with crude moving lower by 0.75%. Natural gas spiked higher by 3.0%. Chevron and Exxon each traded higher.
Source: PFS Group
