NEW YORK, Dec 21 (Reuters) - U.S. stocks finished lower on Friday after a Republican plan to avoid the "fiscal cliff" failed to gain sufficient support on Thursday night, draining hopes that a deal would be reached before 2013. Still, stocks managed to rebound from the day's lows near the end of the session, and for the week, the three major U.S. stock indexes still ended higher, with the S&P 500 gaining 1.2 percent.
Trading was volatile because of waning confidence in the prospect of a deal out of Washington, and in part, as the result of the quarterly expiration of options and futures contracts. The CBOE Volatility Index or VIX, the market's favorite barometer of investor anxiety, finished below its session high. The Dow Jones industrial average dropped 120.88 points, or 0.91 percent, to 13,190.84 at the close. The Standard & Poor's 500 Index fell 13.54 points, or 0.94 percent, to 1,430.15. The Nasdaq Composite Index lost 29.38 points, or 0.96 percent, to 3,021.01. For the week, the Dow gained 0.4 percent and the Nasdaq climbed 1.7 percent.
Republican House Speaker John Boehner failed to garner enough votes from even his own party to pass his "Plan B" tax bill late on Thursday. It was the latest setback in negotiations to avoid $600 billion in tax hikes and spending cuts that some say could tip the U.S. economy into recession. "The failure with Plan B was disappointing, if not terribly surprising, but now there's a real lack of clarity about what will happen, and markets hate that," said Mike Hennessy, managing director of investments for Morgan Creek in Chapel Hill, North Carolina.
Still, the declines of about 1 percent in the three major U.S. stock indexes suggest that investors do not believe the economy will be unduly damaged by the absence of a deal, said Mark Lehmann, president of JMP Securities, in San Francisco. Banking shares, which outperform during economic expansion and have led the market on signs of progress on resolving the fiscal impasse, led Friday's declines. Citigroup Inc fell 1.7 percent to $39.49, while Bank of America slid 2 percent to $11.29. The KBW Banks index lost 1.19 percent.
About 8.59 billion shares changed hands on major U.S. exchanges, more than the daily average of 6.47 billion daily in 2012, in part because of the "quadruple witching" expiration. The day's round of data indicated the economy was surprisingly resilient in November; consumer spending rose by the most in three years and a gauge of business investment jumped. But separate data showed consumer sentiment slumped in December. The S&P Retail Index fell 1.2 percent.
FKLI opened higher this morning even though Dow Jones closed more than 100 points down. FKLI spot month reached a new high of 1685.50 after opening at 1669 this morning. This rebound is likely due to the year-end window dressing activity. Nevertheless, the market may close lower today on profit-taking as investors trim their positions ahead of Christmas and New Year holidays. [Reuters]
Today’s Support and Resistance for December contract is located around 1,665 and 1,685 respectively.
No comments:
Post a Comment