Stocks finish higher on optimism over budget talks

Stocks started lower Friday but spiked higher shortly before midday as the top members of the House and Senate spoke at the White House following a closed-door session with President Obama.

|
Brendan McDermid/Reuters
NYSE Euronext Inc. CEO Duncan Niederauer (C) watches traders work on the floor of the New York Stock Exchange Friday. Stocks notched their first advance in four days Friday.

Optimism that President Barack Obama and Congressional leaders will reach a deal on the budget deficit and avoid the "fiscal cliff" helped stocks notch their first advance in four days.

The market started lower Friday but spiked higher shortly before midday as the top members of the House and Senate spoke at the White House following a closed-door session with Obama. House Speaker John Boehner and Senate Minority Leader Mitch McConnell both said they offered higher tax revenue as part of a deal. Boehner said he outlined a framework that is consistent with Obama's call for a "balanced" approach of both higher revenue and spending cuts.

"It's a good start ... the fact that they were all standing together," said Ben Schwartz, the chief market strategist at Lightspeed Financial, a New York-based broker.

The Dow Jones industrial average closed up 45.93 points, or 0.4 percent, at 12,588.31, after falling as much as 71 points at mid-morning. The Standard & Poor's 500 index rose 6.55 points, or 0.5 percent, to 1,359.88 and the Nasdaq rose 16.19 points, or 0.6 percent to 2,853.13.

Investor concern that Obama and Congress won't reach a deal on how to cut the deficit has caused a sell-off in stocks since Election Day. Stocks fell Wednesday after Obama insisted that higher taxes on wealthy Americans would have to be part of any deal and that he would not cave to Republicans who have pressed for tax cuts first passed by President George W. Bush to be extended for all income earners.

The Dow is down 5 percent since Nov. 6. If an agreement isn't made, automatic government spending cuts and tax increases are set to kick in at the beginning of next year. The measures total about $671 billion for the 2013 calendar year and could send the U.S. back into recession.

Mitch Stapley, chief investment officer at Fifth Third Asset Management, says that investors and traders are likely to be in for a rough ride until the politicians have brokered a deal.

"Volatility is going to be the hallmark as we go through this process ... It's going to be a very choppy period coming up," said Stapley, who is based in Grand Rapids, Michigan.

The Dow still ended lower for the week, logging a fourth straight weekly decline. That slump has pared the index's gains for the year to 3 percent. The S&P 500 also ended the week lower, and has fallen three of the last four weeks.

Mixed earnings reports also weighed on stocks.

Dell fell 70 cents, 7.3 percent, to $8.86. The computer maker is struggling as consumers switch to tablets and smartphones away from PCs. Dell said that its revenue may fall as much as 13 percent in the fourth quarter. Sears fell $10.99, or 19 percent, to $47.49 after the retailer said sales at both its Kmart and Sears stores continued to tumble.

Superstorm Sandy depressed U.S. industrial output in October, while production of machinery and equipment declined sharply, reflecting a more cautious outlook among businesses, according to a Federal Reserve report.

The Fed says industrial output fell 0.4 percent last month, after a 0.2 percent gain in September. Excluding the storm's impact, production at the nation's factories, mines and utilities would have been up about 0.6 percent.

The yield on the benchmark 10-year Treasury note edged down to 1.58 percent from 1.59 percent late Thursday.

Among stocks making big moves:

Schiff Nutrition International, a nutritional supplement company, jumped $9.84, or 29 percent, to $43.76 after U.K.-based Reckitt Benckiser Group offered to pay $42 a share in cash to buy the company. German pharma giant Bayer had offered to buy Schiff in October for $34 a share. Schiff's stock is trading above the most recent offer, suggesting investors anticipate a bidding war may develop.

Ruckus Wireless Inc., a maker of wireless networking equipment, dropped $2.75 to $13.73 on its first day of trading. That's a decline of 18 percent.

Foot Locker rose $1.42, or 4.5 percent, to $33.27. Its net income rose 61 percent in the third quarter.

You've read  of  free articles. Subscribe to continue.
Real news can be honest, hopeful, credible, constructive.
What is the Monitor difference? Tackling the tough headlines – with humanity. Listening to sources – with respect. Seeing the story that others are missing by reporting what so often gets overlooked: the values that connect us. That’s Monitor reporting – news that changes how you see the world.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.

QR Code to Stocks finish higher on optimism over budget talks
Read this article in
https://www.csmonitor.com/Business/Latest-News-Wires/2012/1116/Stocks-finish-higher-on-optimism-over-budget-talks
QR Code to Subscription page
Start your subscription today
https://www.csmonitor.com/subscribe