US stocks were able to pare most losses during the day in the final hour of trading. John Boehner has called for the House of Representatives to convene on December 30, again raising hopes of a deal before January 1.
The S&P 500 index ended up with a drop of just 0.1% after having been down as much as 1.3% earlier. The DOW Jones average ended up down just over 18 points or a mere 0.1% drop.
Hank Smith of Haverford Trust said:“This market has held up remarkably well recognizing that this is political theater and that there is a decent chance that some bridge will be built at the last minute. Dec. 30 is a Sunday. They’re making all of this extra effort to save the day at the last minute.”
Stocks had declined early today (Thursday December 27) after Harry Reid, the Senate Majority Leader, said a resolution before January 1 appeared unlikely as the Republicans would not cooperate. However, the later news that the House will reconvene on the 30th sent the market up from its lows.
Senator Dick Durbin said that Democratic and Republican leaders of the House and Senate will meet with Obama tomorrow. Speaker Boehner has insisted that the Senate must now act:Addressing the Republican rank and file by conference call, Boehner said the next move is up to the Senate, which has yet to act on House-passed bills to retain expiring tax cuts at all income levels and replace across-the-board spending cuts with targeted savings aimed largely at social programs. Obama has said that he will not accept a solution that does not increase taxes on the very rich.
Another issue is now surfacing. Timothy Geithner told Congress that the federal debt limit will be reached on December 31. He said his department will need to take extraordinary measures to finance $200 billion in deficits early in the new year. The markets tomorrow will show whether optimism or pessimism prevails. If there looks to be a deal on the weekend, stocks should rise on the last day of 2012.
In Canada, the TSX ended the day little changed.