Stocks remain down but have bounced off their worst levels following comments from House Speaker John Boehner that he was not ruling out working with Democrats to address the country’s fiscal problems after his Plan B” to avert the looming “fiscal cliff” collapsed.
Speaker Boehner said in a press conference this morning that the failure to vote on the tax bill was not the outcome he wanted. “Unless the President and Congress take action,” Boehner said, “tax rates will go up on every American taxpayer and devastating defense cuts will go into effect in 10 days.”
With time running short to find a solution before Christmas, the White House said it would work with Congress to avoid the series of tax increases and spending cuts set to kick in at the start of next year. President Barack Obama said he was hopeful a deal can be reached quickly.
|DJIA||Dow Jones Industrial Average||13130.07|| ||-181.65||-1.36%||—|
|S&P 500||S&P 500 Index||1423.59|| ||-20.10||-1.39%||0|
|NASDAQ||Nasdaq Composite Index||3005.04|| ||-45.35||-1.49%||0|
Among S&P sectors, techs and consumer cyclicals are pacing declines.
Friday is also “quadruple witching,” when index options, index futures, individual stock options and individual stock futures all expire.
Art Hogan of Lazard Capital Markets said that the market is bouncing back because Boehner didn’t slam the door on negotiations. “I think there is a middle ground here still and fortunately the middle ground is probably going to be with bipartisan support,” Hogan told CNBC.
Barry Knapp, head of U.S. equity portfolio strategy at Barclays, said he thought the market was vulnerable to selling pressure even in a best case scenario. “Between now and when we finally get something done, we should be at 1,325 or 1,300 on the S&P,” he told CNBC in a separate interview.
The fiscal cliff wrangling overshadowed some better-than-anticipated economic data. November personal income rose 0.6 percent while spending increased 0.4 percent. Economists polled by Thomson Reuters forecast income rose by 0.3 percent and spending rose by 0.4 percent.
Durable orders data for November, meanwhile, rose 0.7 percent. Economists polled by Reuters forecast growth in orders will remain at 0.5 percent. Orders rose 1.1 percent in October.
The University of Michigan Consumer Sentiment survey for December came in at 72.9, down from 82.7 in November and lower than the 74.5 economists were expecting.