Harry Reid Spooked the Market

The stock market got spooked late yesterday when Senate Majority Leader Harry Reid said that little progress had been made on budget talks. Still, most political people in Washington say they’re optimistic that a deal will be reached before we reach the dreaded fiscal cliff. My take is that there’s simply too much to lose in not reaching a deal. Somehow something will happen at some point. You heard it here first.

The bad news from our markets spilled over into Europe as stocks dropped modestly over there. Interestingly, Italian bonds have been soaring lately. In fact, soccer players have been profiting. The two-year yield in Italy is at its lowest point in more than two years. The 10-year yield is down to 4.674%. Four months ago, it was yielding 6.6%. Clearly, the crisis that consumed investors this past summer has faded away.

Costco ($COST) became the latest company to announce a big special dividend. The company is going to pay out $7 per share. That’s a yield of 7.25% based on yesterday’s close. All the cash-rich stocks are looking to dish out money to shareholders before the end of the year when tax rates are expected to rise. So far, 103 companies have announced special dividends. Other companies, like Walmart ($WMT), have moved up their dividend dates.

Later today, the Commerce Department will release its report on new home sales.

Posted by on November 28th, 2012 at 6:40 am

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