CRUNCH TIME IN WASHINGTON
After a bipartisan meeting failed to produce a deal to avert the fiscal cliff, President Obama had a terse message for Congress Friday evening: if the Senate couldn’t come up with a new proposal during the weekend, he would urge its leaders to arrange a simple up-or-down vote on a small-scale fix, a bill that would extend long-term jobless benefits into 2013 and sustain the Bush-era tax cuts for those earning $250,000 or less. “I’m optimistic we may still be able to reach an agreement that can pass both houses in time,” the President noted Friday. That certainly contrasted with Senate Majority Leader Harry Reid’s view of prospects for a deal last Thursday: “I don’t know timewise how it can happen now.”1
UNSURPRISINGLY, CONSUMER CONFIDENCE WANES
Worries over the fiscal cliff presumably factored into the big December drop in the Conference Board’s Consumer Confidence Index. It tumbled down to 65.1 from November’s 71.5 mark, declining for a second consecutive month.2
HOME SALES, HOME PRICES IMPROVE
New home sales rose 4.4% in November, according to the Census Bureau; the National Association of Realtors announced a 1.7% gain in pending home sales for that month. These increases took new home sales and pending home sales to their highest levels since April 2010. October’s S&P/Case-Shiller Home Price Index came out last week and showed prices up 4.3% overall from a year before.3
S&P 500 GIVES BACK ITS DECEMBER GAINS
The S&P slipped 1.94% last week to 1,402.43 as doubts over a fiscal cliff deal mounted. The NASDAQ dropped 2.01% last week to settle at 2,960.31 Friday; the DJIA slipped 1.92% in five days to end the week at 12,938.11. As for the CBOE VIX, it closed above 22 on Friday. On the NYMEX, oil gained 2.4% last week to a Friday close of $90.80 a barrel; gold futures lost 0.3% on the week to settle Friday at $1,656.30 an ounce.4,5,6,7
THIS WEEK: The fiscal cliff deadline arrives Monday on Capitol Hill. Tuesday is New Year’s Day; U.S. financial markets will be closed. Wednesday, at least some tax hikes and federal spending cuts may kick in; ISM comes out with its December manufacturing index, and the Commerce Department releases December auto sales figures. Thursday brings new initial jobless claims figures, new Challenger and ADP reports, December’s FOMC minutes and earnings from Family Dollar. December’s jobs report is out Friday, plus ISM’s service sector index and earnings from Mosaic.
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Sources: cnbc.com, usatoday.com, bigcharts.com, treasury.gov, treasurydirect.gov – 12/28/124,5,6,8,9,10
Indices are unmanaged, do not incur fees or expenses, and cannot be invested into directly.
These returns do not include dividends.