U.S. Markets Fall as Lawmakers Spar on Budget Details

Bikram Pandey
27 Nov, 2012
New York City

Market indexes on Wall Street declined as lawmakers showed little progress in settling difference to avoid the so called fiscal cliff. European ministers and lenders agreed to cur Greek debt and offer cheaper and interest free loans as a part of a bailout.

[R]4:35 PM, New York – Market indexes on Wall Street declined as lawmakers showed little progress in settling difference to avoid the so called fiscal cliff. European ministers and lenders agreed to cur Greek debt and offer cheaper and interest free loans as a part of a bailout. Asian markets rallied after reacting first to the end of the current Greek crisis.[/R]

U.S. stocks and indexes declined after lawmakers showed little progress in resolving the upcoming automatic spending cuts and tax increases.

Lawmakers returned to work this week after Thanksgiving holidays but showed little desire to budge from the traditional positions held on the ideological principles by both parties.

Democrats are reluctant to cut entitlement spending and Republicans are firm against the increase in taxes for rich and cut wasteful defense spending.

In corporate news, ConAgra agreed to acquire private-label food maker Ralcorp for $6.8 billion. Hillenbrand fourth quarter net climbed 6% and Ralcorp fourth quarter net loss narrowed. ADT Corp. quarterly net increased 1% to $94 million. Thor first quarter net surged 38%.

On the economic front, consumer confidence increased in the month and durable goods orders were flat in October. Home prices rose 0.3% in September, according to a survey conducted by Federal Housing Finance Agency.

Separately, Commerce Department said durable goods orders were flat in October at $216.95 billion after adjusting for seasonal effects. Increased orders for goods including machinery by 2.9% were offset by the declining demand for new cars and planes.

Non-defense capital goods orders excluding aircraft increased 1.7%, largest increase since May. Demand for motor vehicles and parts fell 1.6% and volatile civilian-aircraft declined 5.8%.

European markets traded at a 3-year high after ministers agreed to release next tranche of bailout to Greece and lower projected debt by 2022. The agreement also provided lower interest rate loans to Greece and offered a decade of interest rate free loans.

The political will to forgo Greek debt lifted the euro after international lenders found a way to compromise on differences after a third round of talks that lasted more than 12 hours.

The O.EC.D lowered its economic outlook across 34-member nations and said unemployment in the region is expected to remain elevated.

In Asia, Nikkei index gained to a new 7-month high as the yen traded near 8-month low after opposition leader called for more fiscal and monetary easing to lift economic growth as a part of general election campaign promise.

Australian stocks edged higher after euro zone ministers struck a bargain that included a package of incentives and conditions to release the next tranche of bailout funds for Greece. Former chiefs of Qantas enter in talks with pilots to gain control. And, artificial blood maker CSL lifted its annual net outlook by 20%.

Commodities, Bonds and Currencies

U.S. treasury yield on 10-year bond traded flat at 1.64% and on 30-year bond closed up to 2.79%.

The U.S. dollar inched lower to $1.293 to a euro and increased against the Japanese yen to 82.16 yen. Indian rupee backed off from the low of 55.95 against one dollar in yesterday’s close to 55.46 as the inflation remains high and elevated oil prices consume most of the imports of the nation.

Immediate delivery futures of Texas crude oil decreased 43 cents to $87.31 a barrel and Brent crude fell 99 cents to $109.91, futures of natural gas increased 0.03 cents to $3.76 per mbtu and gasoline traded up 0.85 cents to 273.48 cents a gallon.

In metals trading, gold decreased $7.60 to $1,742.00 per ounce and silver decreased 12 cents to $34.11 and copper closed up 5 cents to $3.54 a pound.