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Stocks end mixed ahead of Senate vote on tax deal
Source: Agencies |
December 14, 2010, Tuesday
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STOCKS ended flat yesterday after expectations that a tax-cut package will pass the Senate kept them higher for much of the day.
The tax-cut compromise brokered by the White House and Republicans was scheduled for its first Senate vote late yesterday.
If enacted, the package will extend tax cuts passed during the Bush administration for all income levels for another two years. It will also extend unemployment benefits through next year and put in place a one-year reduction in Social Security taxes.
Economists expect the nearly US$900 billion tax package to boost economic growth and increase the size of the budget deficit. House Democrats have pledged to block the measure unless tax rates rise for the nation's wealthiest estates.
Traders were also encouraged by a handful of deals announced yesterday. General Electric Co. is paying US$1.3 billion to buy British oilfield company Wellstream Holdings PLC and Dell Inc. is spending US$960 million for network storage company Compellent Technologies Inc.
The S&P 500 index eked out a new 2010 high for the fourth time in four days. The index rose 0.06 point to 1,240.46.
Other indexes took a late afternoon spill. The Dow Jones industrial average closed with a gain of 18.24, or 0.16 percent, to 11,428.56, having been up as many as 70 points earlier. The Dow is now just 15.52 points from its 2010 closing high, reached Nov. 5.
The Nasdaq composite index fell 12.63, or 0.5 percent, to close at 2,624.91. That snapped a six-day streak in which the index notched new 2010 highs.
Falling shares and rising ones were almost evenly matched on the New York Stock Exchange. Volume was 963 million shares.
The tax plan has crushed the prices of Treasury bonds since it was announced last yesterday. The yield of 10-year Treasurys rose to 3.36 percent early yesterday before falling to 3.28. Treasurys reversed course after the Federal Reserve bought US$7.8 billion in government bonds coming due between 2016 and 2017. Treasury yields have been mainly rising over the past month.
"It looks like the big trade going on right now is that money is working its way out of bonds and into stocks," said Ryan Detrick, a senior strategist at Schaeffer's Investment Research. "We think that is only going to continue as the economy starts looking better."
In corporate news, Hewlett-Packard Co. fell 2.1 percent to US$41.65 after Goldman Sachs gave the hardware company a sell rating. Goldman's analysts see tablet computers, such as Apple Inc.'s iPad, taking business away from PCs.
Shares in Dionex Corp. shot up 20 percent to US$117.83, after Thermo Fisher Scientific Inc. said yesterday it planned to buy the maker of laboratory equipment for US$2.1 billion. Thermo Fisher said it will pay US$118.50 a share. Shares in Thermo Fisher rose 4.7 percent to US$55.56.
The tax-cut compromise brokered by the White House and Republicans was scheduled for its first Senate vote late yesterday.
If enacted, the package will extend tax cuts passed during the Bush administration for all income levels for another two years. It will also extend unemployment benefits through next year and put in place a one-year reduction in Social Security taxes.
Economists expect the nearly US$900 billion tax package to boost economic growth and increase the size of the budget deficit. House Democrats have pledged to block the measure unless tax rates rise for the nation's wealthiest estates.
Traders were also encouraged by a handful of deals announced yesterday. General Electric Co. is paying US$1.3 billion to buy British oilfield company Wellstream Holdings PLC and Dell Inc. is spending US$960 million for network storage company Compellent Technologies Inc.
The S&P 500 index eked out a new 2010 high for the fourth time in four days. The index rose 0.06 point to 1,240.46.
Other indexes took a late afternoon spill. The Dow Jones industrial average closed with a gain of 18.24, or 0.16 percent, to 11,428.56, having been up as many as 70 points earlier. The Dow is now just 15.52 points from its 2010 closing high, reached Nov. 5.
The Nasdaq composite index fell 12.63, or 0.5 percent, to close at 2,624.91. That snapped a six-day streak in which the index notched new 2010 highs.
Falling shares and rising ones were almost evenly matched on the New York Stock Exchange. Volume was 963 million shares.
The tax plan has crushed the prices of Treasury bonds since it was announced last yesterday. The yield of 10-year Treasurys rose to 3.36 percent early yesterday before falling to 3.28. Treasurys reversed course after the Federal Reserve bought US$7.8 billion in government bonds coming due between 2016 and 2017. Treasury yields have been mainly rising over the past month.
"It looks like the big trade going on right now is that money is working its way out of bonds and into stocks," said Ryan Detrick, a senior strategist at Schaeffer's Investment Research. "We think that is only going to continue as the economy starts looking better."
In corporate news, Hewlett-Packard Co. fell 2.1 percent to US$41.65 after Goldman Sachs gave the hardware company a sell rating. Goldman's analysts see tablet computers, such as Apple Inc.'s iPad, taking business away from PCs.
Shares in Dionex Corp. shot up 20 percent to US$117.83, after Thermo Fisher Scientific Inc. said yesterday it planned to buy the maker of laboratory equipment for US$2.1 billion. Thermo Fisher said it will pay US$118.50 a share. Shares in Thermo Fisher rose 4.7 percent to US$55.56.
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