|U.S. markets were mixed Wednesday afternoon, as the Dow and S&P 500 reversed course to post gains on China action and positive news on the fiscal cliff front, while the Nasdaq was dragged down by Apple (NASDAQ:AAPL). |
Investors remained firmly focused on the budget drama that continued to drag on on Capitol Hill, where House Speaker John Boehner today said he was willing to meet with President Barack Obama at any time to resolve the looming, so called fiscal cliff.
The fiscal cliff refers to the more than $600 billion in automatic tax hikes and spending cuts set to take effect in January.
The Dow rallied this afternoon after Bloomberg News reported that 40 Republicans had joined a bipartisan call to break the budget impasse.
Also on Wednesday, Obama addressed the annual Business Rountable conference and affirmed his stance on raising taxes for the nation's wealthiest, and rejected the GOP plan to extend middle-class taxes.
Earlier Wednesday, global markets rallied as China's new leaders called for policy continuity and stability in the first official assessment of the Chinese economy following November's leadership handover.
The Dow was lately up by 115 points to 13,067, the S&P 500 rose 6 points to 1,413, and the Nasdaq was down 12 points to 2,985, weighed down by Apple.
On the economic front in the U.S., ADP estimated Wednesday that the country added 118,000 private sector jobs in November, as 114,000 services jobs were created, with the numbers exactly in line with estimates. The estimated gain from September to October was revised down slightly from the initial estimate of 158,000, to 157,000. The decline October to November was largely due to the disruption caused by Hurricane Sandy.
Elsewhere, third quarter productivity was revised up to 2.9% from an initial estimate of 1.9%, the fastest pace in two years. Economists surveyed by MarketWatch expected productivity to be revised up to 2.8% in the first of the government's two updates to the third-quarter report.
Unit labor costs were revised down to an annualized 1.9% decrease, compared to the original estimate of down 0.1%, and following a 0.5% decline in the second quarter. Expectations were for a 0.9% decrease. Productivity measures the growth of labor efficiency in producing the economy's goods and services.
Also Wednesday, the Institute for Supply Management’s November nonmanufacturing index picked up steam in November but the gains did not lead to new hiring. The ISM's index rose five tenths to 54.7 with business activity over 60 for the first time since February. Economists anticipated a decline to 53% in November from 54.2% in October.
New orders are near 60 at 58.1 for a more than three point gain and the best reading since March.
Meanwhile, the Commerce Department reported factory orders unexpectedly rose 0.8% in October.
Apple (NASDAQ:AAPL) was lately dragging down the tech-heavy Nasdaq index. The iPad maker's shares fell more than 4.5% ahead of a court hearing on Thursday in San Jose, California, on motions related to its win back in the summer in a patent infringement case with rival Samsung. The hearing is for the judge to consider penalties against Korea's Samsung, though many expect the electronics giant to petition for a new trial.
Meanwhile, International Data Corp reported Apple's share of the global tablet market will slip in 2012 to 53.8% from 56.3%, while Google's (NASDAQ:GOOG) Android share is expected to rise. Share in the iPad maker fell more than 4% Wednesday.
In other corporate news, Citigroup (NYSE:C) Wednesday announced it will cut over 11,000 jobs worldwide in order to save over $1.1 billion a year starting in 2014.
As a result of the cuts, Citigroup said it expects to record pre-tax charges of about $1 billion in the fourth quarter and roughly $100 million of related charges in the first half of 2013.
The company also said it expects to generate $900 million in savings in 2013 and that the cuts will have a negative impact on annual revenues of less than $300 million. New chief Michael Corbat said the cuts come as part of the company’s strategy to identify areas and products that are not providing meaningful returns.
Shares of Citi advanced on the news, rising almost 7% to $36.81 in late afternoon trade.
Nokia Corp. (NYSE:NOK) rose over 10% after the Finnish company said it is partnering with China Mobile Ltd. to launch a new Windows-based Lumia phone for the China market.
Western Digital Corp. (NASDAQ:WDC) shares rose over 8% after the hard-disk manufacturer announced an accelerated dividend. Its 25-cent-a-share dividend to shareholders of record as of December 14 will be dished out on December 26.
Pandora Media’s (NYSE:P) shares tumbled almost 19 per cent Wednesday, after it predicted a loss in the fourth quarter when reporting its third quarter results late Tuesday.
Tibco Software (NASDAQ:TIBX) also issued a disappointing forecast, with shares tumbling more than 20%, with the data management and analytics software company blaming cuts in government spending and Hurricane Sandy. The news hit others in the software sector as well.
Netflix (NASDAQ:NFLX) shares lost almost 2% after a rally on Tuesday, when it announced a content deal with Walt Disney (NYSE:DIS). The decline today is a result of mixed feelings on the deal, as some believe it will lead to eventual growh in subscribers, while others think it is too costly. The terms of the deal were not disclosed.
Mineral producer Freeport-McMoRan Copper & Gold (NYSE:FCX) said today that it has agreed to buy Plains Exploration & Production Company (NYSE:PXP) and McMoRan Exploration Co. (NYSE:MMR) for around $6.9 billion in cash and stock and $3.4 billion in cash, respectively.
The combined company is expected to create a "premier U.S.-based natural resource company". McMoRan and Plains Exploration shares rallied, over 83% and 24%, respectively, while Freeport's shares declined more than 15%.
Chelsea Therapeutics (NASDAQ:CHTP) plunged over 35% after regulators said a trial would help the company gain approval for its fainting drug.
Gold for February delivery declined again after a sharp decline in the previous session, to settle below the key $1,700 an ounce level due to a stronger U.S. dollar.
Gold for February delivery shed $2, or 0.1%, to settle at $1,693.80 an ounce on the Comex division of the New York Mercantile Exchange.
January crude oil also finished lower by 62 cents to $87.88 a barrel, weakened by the strength in the greenback.
European markets finished higher today with shares in Britain leading the region. The FTSE 100 gained 0.39% while France's CAC 40 rose 0.28% and Germany's DAX rallied 0.26%.