NEW YORK, Nov 30 — US stocks finished higher yesterday as investors bought on sporadic dips in a market roiled by conflicting comments from Washington about negotiations on an agreement to avoid the “fiscal cliff”.
Tech shares, including Research In Motion and Advanced Micro Devices, helped the Nasdaq outperform the broader market. Telecommunications and health-care stocks were the day’s best-performing sectors.
Reflecting the uncertainty surrounding US budget talks, trading was choppy. Wall Street reversed early gains and fell shortly after House Speaker John Boehner, the top Republican in Congress, dashed hopes that lawmakers were getting closer to a budget deal that would avert automatic tax increases and spending cuts set for early 2013 — the fiscal cliff — that could push the US economy into a recession next year. But the market rebounded by afternoon and the three major US stock indices rebounded to near their session highs.
“There is an emotional part in buying on the small dips here,” said James Dailey, portfolio manager at TEAM Asset Strategy Fund in Harrisburg, Pennsylvania. “Investors are more worried about missing the rally than losing money as they believe that the ‘fiscal cliff’ will be solved eventually.
“Until the fiscal cliff is solved, the madness of the crowd will not subside.”
Discussions on Capitol Hill are aimed at avoiding big automatic spending cuts and tax hikes, known as the fiscal cliff, that will start taking effect beginning in January.
Boehner’s comment about a lack of progress in talks with the White House was one of a series of contrary pronouncements by lawmakers and the Obama administration over whether Washington will finally cut a deal.
There have been some signs that leaders are moving closer to a fiscal agreement. The S&P 500 has gained about 5 per cent recently after a sell-off that took it down almost 8 per cent following the US election on November 6. But investors remain wary that politicians’ ad hoc statements can spark quick reversals in the market.
US-listed shares of BlackBerry maker Research In Motion rose 4 per cent to US$11.54 after Goldman Sachs upgraded the stock to “buy” from “neutral” on optimism ahead of the launch of the BlackBerry 10 smartphone.
Advanced Micro Devices Inc shares gained 4.1 per cent to US$2.04 on plans to sell and lease back its campus in Austin, Texas. The sale and lease-back will raise cash and fund its chipmaking business as Advanced Micro Devices diversifies beyond the struggling PC industry into new markets.
The Dow Jones industrial average rose 36.71 points, or 0.28 per cent, to 13,021.82 at the close. The Standard & Poor’s 500 Index gained 6.02 points, or 0.43 per cent, to 1,415.95. The Nasdaq Composite Index advanced 20.25 points, or 0.68 per cent, to close at 3,012.03.
So far this week, the Dow is up 0.1 per cent, the S&P 500 is up 0.5 per cent and the Nasdaq is up 1.5 per cent.
But shares of top retailers retreated in the wake of data showing a weak start to November sales after Superstorm Sandy. Kohl’s Corp fell 12 per cent to US$45.02.
Tiffany shares dropped 6.2 per cent to US$59.80 after the upscale jeweller reported quarterly results and cut its full-year sales and profit forecasts.
Supervalu shares sank 18.6 per cent to US$2.28 after a report that Cerberus Capital Management was having difficulty obtaining financing to buy out the troubled grocery chain.
Data showed the US economy grew faster than initially thought in the third quarter as businesses restocked, but consumer and business spending were revised lower in a sobering reminder of the economic recovery’s underlying weakness.
Contracts to buy previously owned US homes rose more than expected in October, a sign the housing market recovery advanced into the fourth quarter despite a mammoth storm and concerns over looming tax hikes. Homebuilders’ shares rose. The PHLX housing index rose 0.8 per cent.
About 6.15 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.48 billion shares.
On both the NYSE and the Nasdaq, roughly three stocks rose for every one that fell. — Reuters