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Stocks meander as investors await ‘fiscal cliff’ deal
NEW YORK (AP) — The stock market moved between small gains and losses in early trading Thursday. Uncertainty about the approaching “fiscal cliff,” just days away, was top of mind for many traders.
The House planned to move ahead on what Speaker John A. Boehner called “Plan B,” though President Obama has threatened to veto it.
Shortly after 10 a.m. EST, the Dow Jones industrial average was up seven points at 13,259. The Standard & Poor’s 500 was up two at 1,438. The Nasdaq composite index rose a fraction to 3,045.
Also at the forefront for many traders was the news that NYSE Euronext, the parent of the New York Stock Exchange, planned to sell itself to IntercontinentalExchange, an upstart and lesser-known exchange operator based in Atlanta.
NYSE Euronext’s stock surged 31 percent, rising $7.40 to $31.45. IntercontinentalExchange fell $2.89 to $125.42. Those moves signal that traders think the proposed deal could be more beneficial to NYSE Euronext than to its potential buyer. The marriage still needs the approval of regulators, and it isn’t clear if they’ll offer it.
In Washington, the Republicans’ proposal would raise taxes on the wealthy, something the Democrats have pushed for. But the plan also left in place budget cuts to the military and domestic agencies that Democrats have generally opposed.
If the Republicans and Democrats don’t work out a compromise before the end of the month, the U.S. could go over the 1fiscal cliff, a reference to taxes increases and sweeping government spending cuts that would automatically kick in if no budget deal is in place. Some economists fear that would push the U.S. back into recession.
To be sure, many observers expect that a deal will be worked out ahead of the deadline — perhaps at the last minute, and with lots of political theatrics, but worked out nonetheless. In the meantime, the uncertainty has kept the market sluggish and indecisive for weeks.
Even without the complications of the fiscal cliff, the U.S. economy has been difficult to read, a pattern that continued Thursday.
The government said the U.S. economy grew at an annual rate of 3.1 percent over the summer, higher than the previous estimate of 2.7 percent, but the growth is likely to slow in the current quarter and early next year.
The government also reported that the number of Americans applying for unemployment benefits rose last week, a disappointment after four straight weeks of declines. But the four-week moving average of jobless claims, a less volatile measurement, fell.
A slate of companies reported earnings, with varied results:
• Darden Restaurants, the parent of Olive Garden and Red Lobster, slipped 78 cents to $46.03 after the company reported lower profit and revenue.
• Rite Aid, the drugstore chain, soared 10 percent, rising 11 cents to $1.15, after the company reported its first quarterly profit since 2007.
• Discover Financial Services fell $1.26 to $38.51. The company reported higher profit and revenue, but earnings missed analysts’ expectations.
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