CullmanTimes.com - Cullman, Alabama

Business

November 19, 2012

US stocks rise on hopes for budget deal, Europe

The stock market finally shook its post-election slump.

Investors seized on hope that Washington will reach a deal on the federal budget and drove stocks Monday to their biggest gain in two months. A pair of strong corporate earnings reports also helped.

The Dow Jones industrial average closed up 207 points, or 1.7 percent. Since President Barack Obama and a divided Congress were returned to power Nov. 6, the Dow had fallen six of eight days and a total of 650 points.

Obama and congressional leaders are in talks to avoid going over a "fiscal cliff" on Jan. 1, when tax increases and mandatory government spending cuts are set to take effect.

While Obama and Republicans appear at odds on whether tax rates for the wealthiest Americans should rise, lawmakers suggested over the weekend that progress is possible.

"I can tell you that the fiscal cliff is focusing the mind," Illinois Sen. Richard Durbin, a Democrat, said on CNN's "State of the Union." He said he had heard from Republicans "the beginning of a negotiation."

Comments like those comforted investors, who are grasping for signs that the negotiations might go somewhere.

"It is quite clear that both sides want to come to a compromise and that a reasonable compromise is available," David Kelly, chief global strategist for J.P. Morgan Funds, wrote in a note to clients.

Other financial analysts suggested the market's surge Monday may not last.

"I don't think anything has changed. It's just the talk from day to day," said Stephen Carl, principal and head equity trader at The Williams Capital Group, an investment bank. "We'll see what happens tomorrow."

This week's market will be tougher to decipher, Carl said, because volume is increasingly light leading up to the Thanksgiving holiday. Big price swings are more likely when there are fewer buyers and sellers in the market.

The Dow finished up 207.65 points at 12,795.96. The Standard & Poor's 500 index rose 27.01 points, or 2 percent, to 1,386.89. The Nasdaq composite average gained 62.94, or 2.2 percent, to 2,916.07.

The S&P 500 and Nasdaq were lifted by Apple, which had its biggest one-day gain since April. It rose $38.05, or 7.2 percent, to $565.73. Some analysts cast doubt on a sell-off that had pushed the stock down more than 20 percent from its peak in September of $702.10.

Corporate earnings reports also boosted the indexes. Lowe's said its third-quarter profit surged 76 percent. That followed a strong report from Home Depot last week. Lowe's rose $1.98, or 6.2 percent, to $33.96.

Tyson Foods, the country's biggest meat company, beat analysts' expectations for its quarterly earnings. Tyson added $1.84, or 10.9 percent, to $18.72.

Materials stocks, a category that includes forestry companies, metal producers and miners, soared, supported by the latest sign that a recovery in the housing market is firmly under way.

The National Association of Realtors said sales of previously occupied homes in the U.S. rose in October, helped by a stronger job market and record-low mortgage rates. The pace of sales is roughly 11 percent higher than a year ago.

Stocks fell each of the past four weeks as traders fretted that lawmakers would fail to prevent the spending cuts and tax increases from taking effect.

Economists have warned that the hit to the economy could total $700 billion for 2013 and push the United States back into recession, although the damage from the "cliff" would be spread throughout the year, and lawmakers could always reach a deal after Jan. 1.

The indexes turned positive Friday afternoon, breaking a four-day slump, after signs that Obama and Republicans in Congress were prepared to cede long-held bargaining positions.

House Speaker John Boehner and Senate Minority Leader Mitch McConnell said they had offered higher tax revenue as part of a deal. That could include limiting tax deductions for the highest earners.

Monday's gain for the Dow was its biggest since Sept. 6.

The S&P 500, meanwhile, rose above a key technical level, said Randy Frederick, managing director of active trading and derivatives at the brokerage Charles Schwab.

For nearly two weeks, the index has closed below its 200-day average, which on Monday stood at 1,382. It surpassed that marker Monday afternoon. Frederick said that might signal more buying.

Technical levels are historic averages and other indicators used by some traders to decide if stocks are a good value.

The market is closed on Thursday for Thanksgiving and will close early Friday.

On Monday, stock indexes in France, Germany and Britain closed up 2.5 percent as traders hoped that Greece would get its latest round of bailout cash.

Greece needs international lenders and the International Monetary Fund to release the money so that Greece can meet upcoming payments to creditors. Trading in Europe is still volatile. The region has entered recession.

Finance ministers from nations that use the euro will meet Tuesday. Later in the week, leaders will convene to discuss the European Union's budget for the next few years.

Benchmark crude oil rose $2.36, or 2.7 percent, to finish at $89.28 per barrel in New York. Conflict between Israel and Hamas pushed the price up, as did hope for a fiscal pact, which would help the U.S. economy and raise demand.

Earlier, Asian markets rose more modestly.

The yield on the benchmark 10-year Treasury note rose to 1.61 percent from 1.58 percent late Friday, a sign that traders are selling low-risk investments. A bond's yield rises as its price falls.

The market's longer-term direction will likely hinge on U.S. leaders' ability to attack the fiscal challenge between Thanksgiving and Christmas, Frederick said.

"If they can put some sort of a plan together, or make us believe they have a plan, or at least that there's some cooperation going on there, that could be a real boost for the market," he said.

Among big companies making news, Intel's CEO of seven years announced that he will retire in May. The stock rose 6 cents to $20.25.

Diamond Foods hit its lowest price since September 2006 after an analyst cut the snack food company's rating and price target. Diamond restated two years' worth of financial results last Wednesday, effectively wiping $56.5 million in profit from its books. Diamond fell $1.79, or 11.8 percent, to $13.34.

Advanced Micro Devices Inc. rose after an analyst said that the stock could see an "early 2013 bounce." He said investor concerns about the company's solvency were overblown and caused traders to oversell. AMD rose 6 cents, or 3.2 percent, to $1.92.

 

1
Text Only
Business
  • Facebook tests button to let people shop from its website

    Members on desktop computers or mobile devices can click a "buy" button to make purchases through advertisements or other posts on the world's largest social network, the Menlo Park, California-based company said Thursday in a blog post.

    July 18, 2014

  • WSCC HILL.jpg Hill hits the ground running at Wallace State

    Marcie Hill of Double Springs likes taking on new challenges. As an 18-year veteran of the education system, Hill has taught first grade, sixth grade and served as a reading coach to students and teachers in Kindergarten through sixth grade.

    July 16, 2014 1 Photo

  • VIDEO: A boom in firework sales

    This year could be quite the boom for fireworks sales across the U.S. According to the American Pyrotechnics Association, or the APA, sales are already off to a good start.

    July 3, 2014

  • Edward Jones Recognized as 2014 Most Valuable Employer for Military by CivilianJobs.com

    Local financial services firm Edward Jones in the Cullman-area was named a 2014 Most Valuable Employer (MVE) for Military by CivilianJobs.com, recognizing the firm's deep committment to recruiting, training and retaining military veterans as financial advisors.
     

    June 23, 2014

  • CRMC welcomes Harrison.jpg CRMC Welcomes Adam Harrison, DO to the Medical Staff

    Cullman Regional Medical Center (CRMC) is pleased to welcome Adam Harrison, DO to the Medical Staff. Dr. Harrison is originally from Cullman and graduated from Cullman High School in 2002. He obtained his bachelor of biomedical science degree from Auburn University in 2006, and attended Wallace State Community College prior to Auburn. He received his degree in osteopathic medicine in 2010 from Philadelphia College of Osteopathic Medicine Georgia Campus in Suwanee, Ga. He successfully completed an internship through Columbus Regional Medical Center in Columbus, Ga., in 2011. He will complete his residency through UAB Family Medicine in Huntsville, Ala.
     

    June 16, 2014 1 Photo

  • Deadly guardrails spearing drivers is whistleblower's crusade

    Harman is suing Trinity Highway and its Dallas-based owner, Trinity Industries Inc., alleging that it made quiet design changes that transformed guardrail systems across the U.S. into potentially deadly hazards.

    June 12, 2014

  • google-seo-search-results-screenshot.jpg Your new boss is going to Google you, so make sure she likes what she sees

    This is what a professional online reputation management "campaign" looks like: four people — one patched in via video — around a conference room table, jotting notes on laptops, carefully examining every trace of a client's digital existence and plotting a strategy to improve it.

    June 11, 2014 1 Photo

  • Merchants Bank promotes 1.jpg Merchants Bank promotes four officers

    The Board of Directors of Merchants Bank of Alabama, a community bank since 1907, recently announced the promotions of four key officers.
    Kerry Hanvey was promoted from vice president of retail banking to senior vice president of operations. Kerry joined the bank in 1992 and has served in various positions over this 22- year period. Kerry is responsible for bank wide operations for the five bank offices.
     

    June 11, 2014 4 Photos

  • Chamber's June Small Biz of Month.jpg Chamber's June Small Business of the Month winner

    The Cullman Area Chamber of Commerce recently awarded their Small Business of the Month award to Quick Tire Sales of Cullman. The award is given monthly to a local small business that meets nomination requirements. Victor Quick of Quick Tires Sales was thrilled for their business to be selected for this honor.
     

    June 11, 2014 1 Photo

  • $15 minimum wage puts Seattle in uncharted waters

    Depending on which pundit is nattering away, this means Seattle is either going to fall off the map and become a "Mad Max"-style economic wasteland or transform into an egalitarian utopia that inspires sweeping pro-labor activism nationwide.

    June 9, 2014