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Wall Street Seeks Direction As Fiscal Cliff Deadline Looms

Wall Street Seeks Direction As Fiscal Cliff Deadline Looms
12/28/2012 6:59 AM ET

Wall Street is likely to see another lackluster run, as indicated by the U.S. index futures, which point to a lower open. President Barack Obama and Republicans are expected to have another round of discussions to break the deadlock on the budget negotiations. The Asian markets traded higher on hopes of a breakthrough deal, while European stocks are showing some degree of nervousness ahead of the talks. Commodities are firmer despite the dwindling risk appetite. While reacting to the scheduled talks, the markets may also stay tuned to a housing and manufacturing data due after the markets open.

As of 6:30 am ET, the Dow futures are declining 45 points, the S&P 500 futures are moving down 4.80 points and the Nasdaq 100 futures are retreating 10.50 points.

U.S. stocks closed well off the lows of the session on Thursday amid hopes that the fiscal cliff will be negotiated without much of hurt to the economy and amid the release of some mixed economic data.

On the economic front, the ISM-Chicago is set to release the results of its regional manufacturing survey at 9:45 am ET. Economists expect the business barometer based on the survey to improve to 51 in December from 50.4 in November.

The pending home sales index compiled by the National Association of Realtors is scheduled to be released at 10 am ET. The index is expected to rise by 1.8 percent in November compared to a 5.2 percent increase in October.

In corporate news, Arthur J. Gallagher (AJG) announced the acquisition off Michigan-based retirement consulting firm Eriksen Group. The companies did not disclose the terms of the deal.

Prologis (PLD) said its co-CEO Walter Rakowich will retire on December 31st, 2012. As previously announced at the time of AMB and ProLogis merger, Hamid Moghadam will assume the role of CEO and Chairman on January 1st, 2013.

The major Asian markets closed higher, with Chinese stocks leading the advances. As the U.S. lawmakers prepared to renegotiate their stance on the fiscal cliff, traders remained optimistic that a middle-of-the-road approach could emerge to tackle one of the severest threats facing the global economy.

The Japanese market remained a key beneficiary of the yen's weakness and rose for the fourth straight session. The key Nikkei 225 average opened higher and moved roughly sideways before ending up 72.20 points or 0.70 percent at 10,395, its highest closing level since March 10, 2011.

Export stocks rallied strongly in the session, capitalizing on the yen's weakness. Basic material stocks Tokuyama and Ube Industries advanced strongly, while automaker also saw particular strength. On the other hand, electric utilities declined.

Australia's All Ordinaries opened slightly higher and advanced steadily until early afternoon trading. Thereafter, the average gradually pared some of its gains yet ended up 23.90 points or 0.51 percent at 4,685.

The market witnessed broad based strength, with material stocks seeing notable buying interest. Energy and healthcare stocks also witnessed moderate strength.

Hong Kong's Hang Seng Index closed at 22,667, up 46.81 points or 0.21 percent.

Among a slew of economic reports released from Japan, the consumer price inflation report showed that Japanese core consumer prices fell 0.1 percent year-over-year in November. Core consumer prices for Tokyo considered a leading indicator for Japan declined a steeper 0.5 percent.

A separate government report showed that industrial output fell a seasonally adjusted 1.7 percent month-over-month in November compared to expectations for a 0.5 percent increase. Annually, output was down 5.8 percent, steeper than the 4.6 percent drop expected by economists.

Meanwhile, retail sales in Japan rose 1.3 percent year-over-year in November compared to the 1.1 percent increase expected by economists.

European stocks opened notably higher, but since then they have squandered much of their gains and are currently trading on a mixed note.

Revised GDP estimates released by statistical office INSEE showed that the French economy expanded 0.1 percent in the third quarter compared to the initial estimate of 0.2 percent growth.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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