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Wall Street rebounds on House session, but off for 4th day
NEW YORK |
NEW YORK (Reuters) - Stocks fell for a fourth day on Thursday, but recovered most of their losses after the House of Representatives, in the barest sign of progress, said it would come back to work on avoiding the "fiscal cliff" this weekend.
It was a jittery session for stocks, with shares falling more than 1 percent after Senate Majority Harry Reid warned a deal was unlikely before the deadline, only to rebound merely on the news that the House would reconvene Sunday, a day before the December 31 "cliff" deadline.
"There's no conviction in the move or the overall market, based on the across-the-board reduction we've seen in volume ... but there will be continued weakness until there's sustained positive direction coming from our leaders," said Joseph Cangemi, managing director at ConvergEx Group, in New York.
The market has been prone to quick reactions to headlines and those moves have sometimes seemed more dramatic because of reduced trading volume. About 5.18 billion shares changed hands on the New York Stock Exchange, the Nasdaq and the NYSE MKT, well below the daily average so far this year of about 6.48 billion shares.
Investors are looking for any hint that lawmakers will avert the $600 billion in tax hikes and spending cuts that will start to take effect next week and could push the U.S. economy into recession.
"Markets turned around in a heartbeat, as the House session is the first announcement of anything getting done," said Randy Bateman, chief investment officer of Huntington Asset Management, in Columbus, Ohio, which oversees $14.5 billion in assets. "I'm not convinced it will result in a deal, but you could get enough concessions by both parties to at least avoid the immediacy of going over the cliff."
In a sign of the anxiety, the CBOE Volatility Index .VIX, or VIX, rose above 20 for the first time since July, suggesting rising worries, but ended up finishing the day down 0.4 percent as the stock market rebounded.
Stocks in the materials and the financial sectors, which are more vulnerable to the economy's performance, bore the brunt of the selling before recovering. Shares of Bank of America (BAC.N) fell 0.6 percent to $11.47 while Freeport-McMoRan Copper & Gold (FCX.N) fell 0.7 percent to $33.68.
Some of 2012's biggest gainers bucked the broader trend and rallied, a sign of year-end "window dressing." Expedia Inc (EXPE.O) was the S&P 500's top percentage gainer, climbing 4.1 percent to $60.30. The price of the online travel agency's stock has doubled this year.
The Dow Jones industrial average .DJI slipped 18.28 points, or 0.14 percent, to 13,096.31 at the close. The Standard & Poor's 500 Index .SPX declined 1.73 points, or 0.12 percent, to end at 1,418.10. The Nasdaq Composite Index .IXIC dropped 4.25 points, or 0.14 percent, to close at 2,985.91.
Marvell Technology Group (MRVL.O) fell 3.5 percent to $7.14 after it said it would seek to overturn a jury's finding of patent infringement. The stock had fallen more than 10 percent in the previous session after a jury found the company infringed on patents held by Carnegie Mellon University and ordered the chipmaker to pay $1.17 billion in damages.
The four-day decline marked the S&P 500's longest losing streak in three months. The index has lost 1.8 percent over the period as investors grapple with the possibility that a deal may not be reached until next year.
President Barack Obama arrived back in Washington from Hawaii to restart stalled negotiations with Congress. House Speaker John Boehner and other Republican leaders were to hold a conference call with Republican lawmakers. The expectation was that lawmakers would be told to get back to Washington quickly if the Senate passed a bill.
Treasury Secretary Timothy Geithner announced the first of a series of measures that should push back the date when the U.S. government will hit its legal borrowing authority - a limit known as the debt ceiling - by about two months.
Economic data seemed to confirm worries about the impact of the fiscal cliff on the economy.
The Conference Board, an industry group, said its index of consumer confidence in December fell to 65.1 as the budget crisis dented growing optimism about the economy. The gauge fell more than expected from 71.5 in November.
However, the job market continues to mend. Initial claims for unemployment benefits dropped 12,000 to a seasonally adjusted 350,000 last week and the four-week moving average fell to the lowest since March 2008.
Decliners outnumbered advancers on the New York Stock Exchange by a ratio of about 8 to 7, while on the Nasdaq, about 14 stocks fell for every 11 that rose.
(Editing by Jan Paschal)
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