Fiscal Cliff Talks Dampen Market

The stock market is down so far this morning, although the futures action signaled that it could have been much worse. After the dissolution of John Boehner’s attempt to bridge the Fiscal Cliff, the futures dropped down to 1,391. Fortunately, the S&P 500 is currently around 1,426 which is a loss of about 1.3%. That’s still higher than where we were when the market closed last Friday.

The government reported that consumer spending rose by the most in three years:

The Commerce Department said on Friday inflation-adjusted consumer spending rose 0.6 percent, and after-tax income climbed 0.8 percent when adjusting for inflation.

The department gave no indication super storm Sandy, which slammed the East Coast in late October and kept many people out of work for weeks, had impacted the data or its collection in November.

Spending before taking into account changes in prices rose 0.4 percent. Economists polled by Reuters had expected nominal consumer spending would rise 0.3 percent last month.

The rise in real spending was the largest increase since August 2009 and suggested purchases by consumers were not taking the hit many expected due to growing fears the economy could slip into recession next year.

The bad news this morning is the consumer sentiment dropped to a five-month low.

The Thomson Reuters/University of Michigan consumer sentiment index decreased to 72.9, the weakest since July, from 82.7 in November. Economists projected a final reading of 75 for December, according to the median of 66 estimates in a Bloomberg survey. Today’s figure was lower than a preliminary report earlier this month.

Posted by on December 21st, 2012 at 11:40 am

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.