EmailThings were going OK yesterday early on. The stock market was digesting recent gains, which is to say it was showing some modest losses, but, then, the mood shifted following a brief press conference by House Speaker Boehner who made it sound as if there could very well be some cliff diving come January 1.
The market used his resistant stance as an excuse to accelerate some profit-taking efforts and closed near its low for the session.
The interesting thing about yesterday's performance is that the defensive-oriented sectors -- telecom services (-1.2%), health care (-1.1%), consumer staples (-1.0%) and utilities (-0.9%) -- were the worst performers.
If there was a true fear of the fiscal cliff happening, the aforementioned sectors should have outperformed. Accordingly, their underperformance leaves us inclined to believe that yesterday was indeed a case of profit taking after a strong run more than anything else.
Today, the cash market appears poised to open relatively flat.
A mixed bag of earnings reports from Bed Bath & Beyond (BBBY), Accenture (ACN), Paychex (PAYX), ConAgra (CAG), Jabil Circuit (JBL), and Discover Financial (DFS) failed to impress, and the same thing can be said about the latest initial claims report.
Specifically, claims for the week ending December 15 jumped 17,000 to 361,000 (Briefing.com consensus 345,000), pushing them right back between 350,000 and 400,000 where they have been stuck for a long time. The inference is that claims levels do not support the idea that payrolls will increase enough to bring down the unemployment rate sharply.
Continuing claims for the week ending December 8 increased 12,000 to 3.225 mln (Briefing.com consensus 3.192 mln).
In a bit of a surprise, Q3 GDP growth was revised up with the final estimate to 3.1% from 2.7%. The backward-looking nature of the number, though, and the understanding that Q4 GDP is tracking much lower, has diminished its influence as a market driver.
The Existing Home Sales report for November (Briefing.com consensus 4.90 mln; prior 4.79 mln), the Philadelphia Fed Index for December (Briefing.com consensus -1.3; prior -10.7), and the Leading Indicators report for November (Briefing.com consensus 0.2%; prior 0.2%) will be released at 10:00 a.m. ET.
In other news -- and big news at that -- NYSE Euronext (NYX) confirmed that it agreed to be acquired by IntercontinentalExchange (ICE) for $33.12 per share in cash and stock or $8.2 bln. The offer price represents a 37.7% premium over NYX's closing price on December 19.
Like other items, the market has kept its enthusiasm in check over this announcement as the fiscal cliff dealings are getting curiouser and curiouser.
