Stocks finish flat on light volume, looming fiscal cliff
U.S. stocks finished little changed Monday amid thin trading volume and ongoing worries over the looming fiscal cliff as well as uncertainty over Europe and Greece.
Trading volume was particularly light with many traders out for the Veterans Day holiday. A little over 2 billion shares exchanged hands on the New York Stock Exchange Monday. Over the past month, average daily volume has clocked in at more than 3.5 billion shares. While the stock market was open, the bond market and banks were closed, and no major U.S. economic data was released.
After opening with small gains, all three indexes fell into the red before turning higher again in afternoon trading. But by the end of the day, the Dow Jones industrial average, S&P 500 and Nasdaq Composite were all less than a quarter of a point off from Friday's closing levels.
"It's all about the the machinations over whether we can expect to see a compromise on the fiscal cliff," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "The market just doesn't want to get ahead of itself."
Lawmakers have less than two weeks worth of scheduled work days in the lame duck session to strike a deal that prevents the onset of $7 trillion of spending cuts and tax increases in January, and Luschini is skeptical of that happening.
But rather than allowing the nation to careen over the fiscal cliff, he expects Washington will come up with short-term stop-gap measures that delay or soften the impact of the fiscal cliff, and push the task of making the big decisions until next year.
Stocks sold off sharply last week, with the major indexes sliding more than 2%, as investors worried the government would fail to cut a deal by January, potentially triggering a recession.
President Obama said Friday that he will meet with Republican and Democratic leaders this week in an effort to resolve discrepancies between the two parties.
Meanwhile, Europe was also in focus Monday, as finance ministers from the 17 eurozone countries met in Brussels to discuss Greece's economic reforms.
Over the weekend, Greece's parliament approved the nation's 2013 budget. The vote was a big step toward unfreezing international bailout funds, even though disagreement among its creditors could push back the timetable for when that aid will resume.
European stocks closed mixed. Britain's FTSE 100 closed slightly in the red, while the DAX in Germany rose 0.1% and France's CAC 40 slipped 0.5%.
In Asia, Japan's economy contracted at an annual rate of 3.5% in the latest quarter, sparking concerns of a sustained regional slowdown. The worse-than-expected GDP figures, however, intensify the pressure for additional stimulus, said analysts at Wells Fargo Advisors.
Asian markets ended mixed. Japan's Nikkei lost almost 1%, while the Shanghai Composite added 0.5% and the Hang Seng in Hong Kong ticked up 0.2%.
Shortly after the market opened Monday, the NYSE Euronext, operator of the New York Stock Exchange, said it was "experiencing an issue" executing orders due to trouble with one of its engines that matches buy and sell orders, affecting more than 200 stocks, including CVS Caremark and U.S. Steel.
Following the the NYSE's alert, Nasdaq OMX and the BATS BYX Exchange declared "self-help," meaning that they stopped routing orders to the New York Stock Exchange. NYSE said its issue was resolved before midday, and around 3 p.m. ET, Nasdaq and BATS resumed routing orders to the NYSE.
Companies: Homebuilders DR Horton and Beazer Homes both reported less-than-stellar quarterly results Monday, sending shares lower.
DR Horton reported a stronger-than-expected profit but missed on revenue. Meanwhile, Beazer Homes posted a quarterly loss of $2.57 per share, falling short of analyst expectations.
Homebuilders had recently been benefiting from signs of a gradual housing recovery. DR Horton shares have rallied 77% over the past year, while Beazer's stock is up 50%.
Jefferies Group shares surged after the securities firm agreed to merge with Leucadia National in an all-stock deal.
Shares of Gilead Sciences climbed after the biotechnology giant announced encouraging findings about hepatitis C drugs.
Research in Motion shares edged higher after the company announced it will launch its BlackBerry 10 on January 30.
Shares of Titanium Metals Corporation rallied following Friday's late news that Precision Castparts would acquire the firm for $16.50 per share, valuing Titanium Metals at $2.9 billion.
JC Penney shares fell to a new 52-week low after being downgraded by Credit Suisse. The retailer, which reported disappointing results last week, continues to struggle with overhauling its image. JC Penney was the worst performer on the S&P 500 Monday.
Currencies and commodities: The dollar was flat against the euro and the Japanese yen but rose slightly versus the British pound.
Oil for December delivery fell 50 cents to settle at $85.57 a barrel.
Gold futures for December delivery settled unchanged at $1,730.90 an ounce.
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