The Dow Jones Industrial Average (DJI) proved resilient today, bouncing back from an early triple-digit deficit. Fiscal-cliff chatter fueled the market's roller-coaster session, with optimistic comments from both President Barack Obama and House Speaker John Boehner (R-Ohio) placating the Street. By the close, the signs of bipartisanship overrode yesterday's discouraging update from Senate Majority Leader Harry Reid (D-Nev), and made lackluster housing data a virtual afterthought.
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The Dow Jones Industrial Average (DJIA) traversed a range of more than 200 points today, but ended on the plus side. By the time the dust settled, the blue-chip barometer tacked on nearly 107 points, or 0.8%, to end just off a session high. Only three of the Dow's 30 components bucked the trend, with Cisco Systems (NASDAQ:CSCO) leading the laggards with a 0.7% drop, and Hewlett-Packard (NYSE:HPQ) paving the path higher with a 3% gain. AT&T (NYSE:T), meanwhile, finished flat.
The S&P 500 Index (SPX) also bounced back from Tuesday's drubbing. After hitting an intraday nadir of 1,385.43, the broad-market index reversed course to end about 11 points, or 0.8%, higher -- and back atop the 1,400 level. Likewise, the Nasdaq Composite (COMP) clawed its way out of the red, tacking on 24 points, or 0.8%, to finish north of its 200-day moving average for the first time in more than three weeks.
The CBOE Market Volatility Index (VIX), on the other hand, moved opposite stocks, surrendering early gains to give up roughly 2.6% by the bell.
A Trader's Take
"It's all about the fiscal cliff right now," said Schaeffer's Senior Equity Analyst Joe Bell. "Stocks started the day lower, but comments from House Speaker John Boehner and President Obama have many participants feeling much more optimistic about an agreement on this issue. We are certainly in a headline-driven market right now, and it seems like each and every word out of Washington greatly affect the markets."
Today's afternoon rebound was reassuring, though. "Bulls had to be encouraged by the strong bid markets received after the early sell-off," stated Bell. "Every decline recently has been met with more buyers coming to the table, and the intraday reversal was very promising in the short term. Technically, the 1,420 area on the SPDR S&P 500 ETF Trust (SPY) could continue being an issue, though, and many other indexes are facing overhead resistance as well."
Economic and Earnings News
New home sales slowed in October, dropping by 0.3% to a seasonally adjusted annual rate of 368,000, said the Commerce Department. This was shy of the 385,000 expected by economists. Also, September's reading was lowered by 20,000 to 369,000 from the originally reported 389,000.
The U.S. economy grew at an annualized rate of 2% in the third quarter, but has expanded at just a "measured pace" in the past few weeks, according to the Fed's Beige Book. Most of the 12 districts reported "modest improvements in hiring activity," and retailers appear optimistic about holiday sales, the central bank said. However, seven districts reported ebbing factory activity -- five of which attributed the downturn to uncertainty about the fiscal cliff.
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