Wall Street trims gains, volatile after Boehner remarks

November 29th, 20127:58 pm @


Thu Nov 29, 2012 12:38pm EST

NEW YORK (Reuters) – Stocks climbed on Thursday, but shed some earlier gains, after John Boehner, the top Republican in Congress, poured cold water on hopes that lawmakers were getting closer to cutting a budget deal that would avert a possible recession next year.

Boehner’s comment – that no “substantive” progress had been made in fiscal talks with the White House – was the latest in a string of contrary pronouncements by policymakers that have wobbled the markets as investors attempt to speculate over whether Washington will finally cut a deal.

There have been some signs that leaders are moving closer to a fiscal agreement. The SP 500 has gained nearly 5 percent after dropping almost 8 percent following the U.S. election in November. But investors remain wary that ad hoc statements from politicians can spark quick reversals in the market.

“When the sentiment is that nothing is going to get done, it does create a lot of anxiety and selling pressure. If there’s any sense of progress, then the market seems to rally,” said Eric Kuby, chief investment officer at North Star Investment Management in Chicago. “I think we’re hostage to this for the rest of the year.”

Discussions are ongoing in Congress over avoiding big spending cuts and tax hikes, known as the “fiscal cliff,” that will begin to take effect from January.

The Dow Jones industrial average .DJI gained 6.95 points, or 0.05 percent, to 12,992.06. The Standard Poor’s 500 Index .SPX gained 3.40 points, or 0.24 percent, to 1,413.33. The Nasdaq Composite Index .IXIC gained 11.82 points, or 0.40 percent, to 3,003.60.

U.S.-listed shares of BlackBerry maker Research In Motion (RIMM.O) surged 5.9 percent to $11.75 after Goldman Sachs upgraded the stock to “buy” from “neutral” on optimistic ahead of the launch of the BlackBerry 10 smartphone.

Shares of top retailers retreated in the wake of data showing a weak start to November sales after superstorm Sandy. Target (TGT.N) fell 1.6 percent to $61.80 percent and Kohl’s Corp (KSS.N) dropped 8.2 percent to $46.94.

The U.S. 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.

Gross domestic product expanded at a 2.7 percent annual rate in the quarter, the Commerce Department said, as export growth helped offset the weakest consumer spending and first drop in business investment in more than a year.

Contracts to buy previously owned U.S. 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.

Shares of companies that build homes rose. The PHLX housing index .HGX rose 0.4 percent, shedding some earlier gains in line with the pullback in the broader market.

Tiffany (TIF.N) shares slumped 6.7 percent to $59.48 after the upscale jeweler reported quarterly results and cut its full-year sales and profit forecasts.

Although domestic events largely dominated investors’ attention, the euro zone is still on the radar. The yield on Italy’s 10-year bonds fell to the lowest in two years at an auction, amid relief that international lenders reached agreement this week to reduce Greece’s debt by more than 40 billion euros. GVD/EUR

“The fact that the bond sales in Europe went well suggest confidence is beginning to reenter some of the peripheral nations and that is a good sign,” said Peter Cardillo, chief market economist at Rockwell Global Capital in New York.

(Additional reporting by Caroline Valetkevitch; Editing by Bernadette Baum)

Article source: http://feeds.reuters.com/~r/reuters/businessNews/~3/7kTX14vp8xc/us-markets-stocks-idUSBRE8AP08020121129