By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks mostly rose Wednesday, as
Wall Street applauded what appeared to be a softening of stances in
talks to avert the fiscal cliff, but the Nasdaq Composite fell with
Apple Inc.
"You get the impression that there's movement in Washington,
that positions are not ideologically hardened," said Hugh Johnson,
chairman of Hugh Johnson Advisors LLC in Albany, N.Y.
"There is so much focus on the cliff, I'm not even sure Friday's
employment numbers are going to be important," said Johnson, who
adds the number would likely to be distorted by superstorm
Sandy.
Plus, the nonfarm payrolls report doesn't really matter,
"because the outcome of this negotiation will determine what the
economy will look like in 2013, it could look modestly positive or
it could look terrible," said Johnson.
With an agreement, the U.S. economy should grow 2% to 2.4% next
year, and if there is no deal, "we're talking minus 0.5% if we
accept the Congressional Budget Office's analysis," said
Johnson.
"When you have something that has been a driver of the market
down and the market's up, well that's a good combination if you
don't own Apple," said Johnson.
The Dow Jones Industrial Average (DJI) rose 82.71 points, or
0.6%, to 13,034.49, with Travelers Cos. Inc. (TRV) among its risers
after the insurer estimated losses from superstorm Sandy.
The S&P 500 index (SPX) climbed 2.23 points, or 0.2%, to
1,409.28, with utilities the best performing and technology hardest
hit of its 10 major sectors.
Leading gains on the S&P 500, Western Digital Corp. (WDC)
shares rose 7.3% after the hard-disk manufacturer became the latest
company to announce an accelerated dividend.
Citigroup Inc. (C) rallied 6.3% after it announced plans to cut
11,000 jobs, or 4% of its workforce, to reduce costs.
At the opposite end, Freeport-McMoRan Copper & Gold Inc.
(FCX) shares dropped 16% after the mining company said it would pay
$9 billion in cash and stock to acquire Plains Exploration &
Production Co. (PXP) and McMoRan Exploration Co. (MMR).
Apple Inc. (AAPL) shares declined 6.4%.
The Nasdaq Composite (RIXF) fell 22.99 points, or 0.8%, to
2,973.70, ending lower for a fourth consecutive session.
Advancers pulled ahead of decliners on the New York Stock
Exchange, where 759 million shares traded. Composite volume
surpassed 4.1 billion.
Treasury prices also gained, pushing the yield on the benchmark
10-year note down to 1.59%.
A deal to avert the fiscal cliff is "not a bad thing for
Treasurys," said Kathy Jones, a fixed-income specialist at Charles
Schwab.
The bond market would prefer it "if we don't have a fight over
the debt ceiling that might rattle foreign investors," said Jones.
Plus, "any credible plan to reduce the deficit would on the margin
slow the economy down," which is also supportive of Treasury
prices, she said.
Cliff notes
Stocks hit their highs of the day after Bloomberg News reported
that about 40 Republicans had joined a bipartisan call to break the
budget impasse.
Bloomberg reported the group had signed a letter urging the
exploration of "all options" on taxes and entitlement programs. One
of the petition signers, Representative Mike Simpson of Idaho, told
the news service: "It's pretty obvious Obama won the election, and
he promised he was going to raise taxes on the wealthiest."
Simpson, a Republican, said he would be willing to go along with
higher tax rates for married couples earning more $500,000 in
exchange for reforming spending on entitlement programs like
Medicare.
Separately, Texas Representative Kay Granger, also a Republican,
called extending tax cuts for middle-class earnings "the right
thing to do."
"The president seems to be saying, we'll do something now, and
possibly, if we do raise taxes on the wealthy, we'll consider
changing that in a year, perhaps by lowering the rate and
broadening the base by eliminating deductions," said Johnson from
Hugh Johnson Advisors.
And, House Speaker John Boehner "did not appoint some of the
more right-of-center Republicans to some committees; that was a
very clear sign that Boehner wants a deal coming," Johnson said of
the Ohio Republican's stance.
Wall Street appeared to ignore reports on the economy while
waiting for resolution to the fiscal cliff.
"We can only hope and pray that behind the scenes there is more
going on than what we're seeing publicly, because publicly it's a
charade," said Art Hogan, market strategist at Lazard Capital
Markets.
The budget saga continued to play out in public on Capitol Hill.
Boehner on Wednesday declared his willingness to meet with
President Barack Obama "at any time" to resolve the fiscal cliff,
or billions in spending cuts and tax hikes scheduled to begin in
January.
Also in Washington, Obama on Wednesday addressed the annual
Business Roundtable conference, a group of influential business and
industry leaders, where he made his case for raising taxes on the
top 2% of earners. Obama warned Republicans against starting
another standoff over the nation's debt ceiling, calling it a
"game" he is not willing to play.
The partisan battle, which culminated last August, over hiking
the U.S. debt limit had the nation near default for the first time
and resulting in Standard & Poor's stripping the government of
its triple-A bond rating.
The Institute for Supply Management said the U.S. services
sector grew at a slightly faster pace in November, and the Commerce
Department reported factory orders unexpectedly rose 0.8% in
October.
"It's great that we talk about economic data, except for the
fact that nobody is going to react to it, because we're still stuck
in the fiscal-cliff dungeon," said Lazard's Hogan.
But Wall Street stands to gain should politicians reach a deal
before the end of the year. "The market has ignored enough good
news for the relief rally to be significant," Hogan said.
U.S. stock futures held their gains after the ADP Research
Institute estimated U.S. companies added 118,000 people to their
payrolls in November after a revised 157,000 gain the prior
month.
The market offered little reaction after the Labor Department
reported nonfarm productivity rose 2.9% in the third quarter, its
fastest pace in two years.
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