Investors’ were hesitant to take positions on Friday, as U.S. lawmakers continued with “fiscal cliff” negotiations, leaving the markets end on a flat note. The S&P 500 rose for five months in the last six months. Meanwhile, personal spending declined for the first time in October in five months. The consumer staples sector was the biggest gainer among the S&P 500 industry groups.
The Dow Jones Industrial Average (DJI) gained 0.03% to close the day at 13,025.58. The Standard & Poor 500 (S&P 500) added 0.02% to finish Friday’s trading session at 1,416.18. The tech-laden Nasdaq Composite Index dipped 0.06% to end at 3,010.24. The fear-gauge CBOE Volatility Index (VIX) jumped 5.4% to settle at 15.87. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 7.0 billion shares, higher than the daily average of 6.48 billion shares. Advancing stocks outpaced decliners on the NYSE; as for 53% stocks that rose, 43% stocks moved lower.
For the week, the Dow gained 0.1%, the S&P 500 rose 0.5% and the Nasdaq surged 1.5%. During the last two weeks, markets have been moving on either side, following developments regarding the ongoing negotiations on the fiscal cliff issue. The Street was boosted by positive economic reports related to the jobs market, GDP and the housing sector.
President Barack Obama held a series of meetings last week to discuss the fiscal cliff dilemma. On Friday, President Obama blamed Republican leaders for obstructing the fiscal cliff deal. He also said: “It's not acceptable to me and I don't think it's acceptable to you for just a handful of Republicans in Congress to hold middle-class tax cuts hostage simply because they don't want tax rates on upper income folks to go up”. Speaker of the United States House of Representatives John Boehner said: “There is a stalemate; let's not kid ourselves”. The fiscal cliff of $600 billion in tax increases and spending cuts will take effect from the beginning of 2013 if Congress fails to strike a deal
Meanwhile, personal spending declined 0.2% in October according to the Bureau of Economic Analysis. This was wider than the consensus estimate of a gain of 0.1%. According to the report, personal income surged less than 0.1%, whereas disposable personal income also added less than 0.1% in October. Personal consumption expenditures declined 0.2% billion in October. Consumer spending declined for the first time in five months. According to the report, Hurricane Sandy affected personal spending in October.
In contrast, the Chicago business barometer increased to 50.4 in November from October reading of 49.9. This was below consensus estimate of 50.9. According to the report, the Chicago business barometer was lifted by production, employment and supplier deliveries. The Chicago business barometer moved above 50 after remaining in the contraction zone for two consecutive months.
The Consumer Staples Select Sect. SPDR (XLP) gained 0.4% and was the major gainer among the S&P 500 industry groups. Stocks such as The Procter & Gamble Company (NYSE:PG), Wal-Mart Stores, Inc. (NYSE:WMT), Church & Dwight Co., Inc. (NYSE:CHD), The Clorox Company (NYSE:CLX) and Monster Beverage Corp (NASDAQ:MNST) gained 0.5%, 1.7%, 0.3%, 1.4% and 0.7%, respectively.