The Joplin Globe, Joplin, MO

Business

November 26, 2012

Fiscal cliff quarrels keep US stocks in check

NEW YORK — The stock market edged lower Monday morning, pulled down by old worries about the debt crisis in Europe and a political standoff over taxes and spending in the U.S.  

In early trading, the Dow Jones industrial average was down 66 points at 12,945. The Standard & Poor’s 500 was down 6 to 1,403. The Nasdaq composite index slipped less than a point, to 2,966.

Monday was the first trading day after the beginning of the holiday shopping season, a crucial time for retailers that rely on Christmas shopping to make up for shortfalls during the rest of the year. But the impact of Thanksgiving Day, Black Friday and the rest of the weekend was hard to read.

The National Retail Federation reported that 247 million shoppers visited stores and shopping websites during the Thanksgiving holiday, up 9 percent from a year ago. They spent an average of $423, up 6 percent.

Still, retailers worry that the momentum won’t last. Retailers like Macy’s, Target and Saks were down in early trading.

One major reason is the overhang of the “fiscal cliff.” That’s when both higher taxes and cuts to government programs, like unemployment benefits and Social Security, will kick in at the end of the year unless Congress and the White House work out a compromise before then.

A government report released Monday warned that a sudden increase in taxes would result in lower consumer spending next year, and some analysts wondered if the concerns about what could happen might crimp spending throughout the rest of the holiday season.

The report, by President Barack Obama’s National Economic Council and his Council of Economic Advisers, estimated that a married couple earning between $50,000 and $85,000 with two children would see a $2,200 increase in their taxes.

The White House wants to raise some taxes, but key business groups have protested vehemently. The homebuilding industry says it won’t stand for even small cuts to the mortgage interest deduction, a tax break that’s meant to encourage homeownership. AARP has publicly lobbied against cuts to Medicare and Social Security.

To be sure, the fiscal cliff fighting could be mostly grandstanding for lawmakers. Lawmakers often fight over budget issues until the dramatic 11th hour, then work out a compromise at the last moment.

Overall, Monday morning was quiet, with no major economic reports due in the U.S. and no major companies scheduled to make big announcements. In Europe, leaders of European Union countries tried to hammer out a deal to lend more money to debt-crippled Greece, but many analysts have come to view that as another tired theme that has already been baked into the markets.

Count David Kelly, chief global strategist at JPMorgan Funds, among the underwhelmed.

“The themes seem about as recycled as Thanksgiving turkey,” Kelly wrote in a note to clients, referring to the fiscal cliff and the European debt crisis. He expected a better read on the economy later this week, with reports on consumer confidence on Tuesday, and unemployment claims and third-quarter economic growth on Thursday.

Sam Stovall, chief equity strategist at S&P Capital IQ, was similarly unmoved. “Most of these uncertainties have been with us for quite some time,” he wrote in a note, “and are now regarded by many as annoyances to resolve rather than obstacles to fear.”

Overall, the U.S. economy has been hard to read. For every sign that it is improving, there’s another that indicates it’s not. The market jumped 421 points last week, one of the best weeks of the year. It was down for four straight weeks beforehand.

 

1
Text Only
Business
Poll

Amendment 8 in Missouri proposes a special lottery ticket to help fund state veterans homes. How will you vote?

For it.
Against it.
     View Results
Facebook
Twitter Updates
Follow us on twitter
NDN Video
Crashed Air Algerie Plane Found in Mali Israel Mulls Ceasefire Amid Gaza Offensive In Case of Fire, Oxygen Masks for Pets Mobile App Gives Tour of Battle of Atlanta Sites Anti-violence Advocate Killed, but Not Silenced. Dempsey: Putin May Light Fire and Lose Control Arizona Prison Chief: Execution Wasn't Botched Calif. Police Investigate Peacock Shooting Death Raw: Protesters, Soldiers Clash in West Bank Police: Doctor Who Shot Gunman 'Saved Lives' 'Modern Family' Star on Gay Athletes Coming Out MN Twins Debut Beer Vending Machine DA: Pa. Doctor Fired Back at Hospital Gunman Raw: Iowa Police Dash Cam Shows Wild Chase Obama Seeks Limits on US Company Mergers Abroad Large Family to Share NJ Lottery Winnings U.S. Flights to Israel Resume After Ban Lifted Official: Air Algerie Flight 'probably Crashed' TSA Administrator on Politics and Flight Bans Raw: National Guard Helps Battle WA Wildfires