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Wall Street Stays Defensive On Fiscal Cliff Scare


Wall Street sentiment remains precarious as the fiscal cliff demon is gaining in stature and the Federal Reserve sets out to discuss its monetary policy stance at the final monetary policy meeting of the year. The uncertainty has proved the undoing of the markets, crimping optimism among traders despite the markets seeing a fairly decent run for much of the year. Apart of the domestic risks, the markets are also left to contend with the ramifications of the debt crisis across the Atlantic. Unless clarity emerges on these uncertainties, the markets could continue to see subdued trading.

As of 6:30 pm ET, the Dow futures are up 29 points, the S&P 500 futures are gaining 2.40 points and the Nasdaq 100 futures are up 5.50 points. Investor sentiment improved a little bit after data showed German investor confidence jumped to a seven-month high in December.

U.S. stocks moved about in a lackluster fashion on Monday amid a lack of any compelling catalysts before closing modestly higher.

On the economic front, the 2-day FOMC meeting is scheduled to begin today, with the post meeting policy statement, FOMC forecasts and the Chairman's press briefing all due for tomorrow. The central bank is widely expected to buy more bonds in lieu of its Operation Twist, which expires by the end of the year

The trade gap data for October is due out at 8:30 am ET. Economists estimate that the trade gap widened to $42.8 billion in the month from the deficit of $41.5 billion reported for the previous month.

The Commerce Department is due to release its wholesale inventories report at 10 am ET. Economists expect wholesale inventories at the end of October to show a 0.4 percent increase. Additionally, the Treasury is scheduled to conduct a 3-year note auction at 1 pm ET.

ABM Industries (ABM) reported fourth quarter results that exceeded estimates. The company's board approved a 3.4 percent increase in its quarterly cash dividend, while the company did not issue guidance for 2013, citing the uncertainty surrounding the fiscal cliff. Limited Brands (LTD) announced a $3 per share special dividend.

In a scheduled financial update, Texas Instruments (TXN) narrowed its fourth quarter revenue guidance. Casey's (CASY) reported second quarter results that were in line with estimates.

National Instruments (NATI) narrowed its fourth quarter non-GAAP earnings guidance to 19-29 cents per share and revenue guidance to $270 million to $290 million. The guidance surrounded the consensus estimates.

Cisco (CSCO) announced the completion of its acquisition of privately held Cloupia, a software company that automates converged data center infrastructure

Parkway Properties (PKY) said it has completed its public offering of 13.50 million shares of its common stock at a public offering price of $13 per share, a discount to its closing price of $13.13 on Monday. Gilead Sciences (GLD) said its board has approved a 2-for-1 stock split of its outstanding stock to be effected through a stock dividend.

Despite the positive lead from Wall Street overnight, the major Asian markets moved about in a lackluster manner before closing on a mixed note. The Japanese, Chinese, Indian and New Zealand market retreated, while the rest of the markets closed higher.

Japan's Nikkei 225 average closed 8.43 points or 0.09 percent lower at 9,525. Electric utilities came under selling pressure, with Kansai Electric and Chubu Electric slipping over 4 percent each. The stocks were reacting to findings by geologists that an earthquake fault line could be active under a nuclear plant run by Kansai Electric. Real estate and financial stocks also declined. On the other hand, retail and resource stocks saw some buying interest.

Australia's All Ordinaries ended up 18.90 points or 0.41 percent at 4,581. Material, utility and energy stocks firmed up in the session, leading the market higher. Hong Kong's Hang Seng Index closed at 22,324, up 47.22 points or 0.21 percent.

On the economic front, the results of a survey by the National Australia Bank showed that Australia's business confidence deteriorated in November. The business confidence index fell to -9 from -1 in October. At the same time, the business conditions index was unchanged at -5.

A report released by the People's Bank of China showed that new yuan loans worth 522.9 billion yuan were extended in November, below forecasts for 550 billion yuan.

European stocks saw some volatility in early trading before moving higher, boosted by positive German investor sentiment data. The Eurogroup is scheduled to hold a conference call on Greece ahead of the EU summit, where the disbursal of the next trance of financing for Greece is likely to be vetted.

In corporate news, HSBC (HBC) has agreed to a settle a U.S. criminal probe into money laundering lapses by paying $1.92 billion. German steel maker Thyssenkrupp reported a loss of 4.7 billion euros in the fiscal year 2012 compared to a profit of 1.7 billion euros last year, with the write downs related to the value of its steel plants in the U.S. and Brazil weighing on the results. The company also cancelled its dividend.

On the economic front, the results of a house price survey by the Royal Institution of Chartered Surveyors showed that its RICS house price balance fell to -9 in November from -7 in October. Economists expected the house price balance to improve to -5.

German wholesale prices rose 3.2 percent year-over-year in November, according to a report released by the German Federal Statistical Office. Economists expected a 4 percent increase, a slowdown from 4.6 percent increase seen in October.

by RTTNews Staff Writer

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