US STOCKS-Futures tumble,tax bill failure may make deal unlikely

Fri Dec 21, 2012 7:20am EST

* Failure of Boehner's bill suggests compromise difficult

* Banking and energy shares could see biggest reaction

* Nike results beat expectations, US shares of RIM slump

* Futures drop: Dow 184 pts, S&P 19 pts, Nasdaq 36.5 pts

By Ryan Vlastelica

NEW YORK, Dec 21 (Reuters) - U.S stock index futures were sharply lower on Friday, dropping more than 1 percent after a Republican proposal for averting the "fiscal cliff" failed to pass, further eroding optimism that a deal would be reached quickly.

* Late Thursday, Republican House Speaker John Boehner conceded there were insufficient votes from his party to pass a tax bill, dubbed "Plan B," to help avert the cliff, a combination of tax hikes and spending cuts that could send the economy into recession if they take effect next year.

* The plan had called for tax increases on those who earn $1 million a more a year, a far smaller slice of taxpayers than President Barack Obama had asked for.

* The failure seemed to indicate it would be difficult to get Republican support for the more expansive tax increases Obama has asked for, making it less likely an agreement will be reached before the end of the year.

* Investors had previously considered such an outcome unlikely. T he decline implied by futures on Friday would wipe out most of the week's equity gains, which took the S&P 500 near two-month highs.

* Banking and energy shares, which outperform in times of economic expansion and have led the market on signs of progress with the fiscal impasse, could be the most vulnerable to any setback. February crude futures dropped 1.3 percent in early trading on Friday.

* S&P 500 futures sank 19 points, or 1.3 percent , and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 184 points and Nasdaq 100 futures slid 36.5 points.

* The S&P is up about 1.8 percent so far this week, boosted as investors took the latest offers from President Barack Obama and Boehner as signs of progress.

* The S&P 500 is up 14.8 percent so far this year, and amid uncertainty from Washington, many traders may lock in their gains as 2012 comes to a close.

* November durable goods data is scheduled for release at 8:30 a.m. (1330 GMT), with the Thomson Reuters/University of Michigan final December consumer sentiment survey due at 9:55.

* Durable goods are seen rising 0.2 percent while the main index in the consumer sentiment survey is seen at 74.7, compared with a prior read of 74.5. On Thursday, strong data on gross domestic product and home sales failed to excite markets as investors focused on the fiscal cliff negotiations.

* Nike Inc late Thursday reported second-quarter earnings that handily beat expectations on strong demand in North America. Software distributor Red Hat Inc posted third-quarter revenue that beat expectations.

* U.S.-listed shares of Research in Motion slumped 10 percent to $12.68 in premarket trading a day after reporting the first ever decline in its subscriber numbers and outlining plans to transform the way it charges for its BlackBerry services.

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