US stocks end substantially lower due to uncertainly over fiscal cliff talks

For the day, the Dow ended lower by 98.99 points (0.74%) at 13,251.74. Nasdaq ended lower by 10.2 points (0.33%) at 3,044.36. S&P 500 ended lower by 10.98 points (0.8%) at 1,435.81.

Among the ten economic sectors, the telecom sector was the hardest hit.

Stocks fell sharply after a two-session rally as negotiations to avoid deep spending cuts and tax hikes seemed to hit an especially rocky spot. Attention of the market place remains on the U.S. "fiscal cliff" tax increases and spending cuts that is fast approaching. The market place still reckons odds are higher than not that there will be a last-minute agreement among U.S. lawmakers to avoid the fiscal cliff. The overall situation has been a bearish drag on many markets.

Wrangling in Washington continued over a deal to avert steep spending cuts and tax increases, known as the fiscal cliff, set to begin next month. On Tuesday, House Speaker John Boehner floated a plan to increase taxes on incomes of $1 million and above.

The market received two notable quarterly reports during the day. Economic bellwether FedEx ended higher by 0.9% following an earnings and revenue beat estimates. While the company's second quarter results exceeded expectations, forward guidance was a point of concern. The package delivery company expects its third quarter earnings to fall below consensus estimates while full-year earnings are expected to be in-line with analyst forecasts.

In another notable tech earnings, Oracle rose by 3.7% after beating on earnings and revenue. During the second quarter, the technology bellwether earned $0.64, which was $0.03 ahead of the consensus estimate. Meanwhile, the software company's revenue of $9.11 billion also exceeded expectations.

Elsewhere, Apple lost 1.4% causing the company's market cap to slip below $500 billion.

Among other stocks under focus, General Motors surged 6.6% after the U.S. Treasury announced plans to sell its remaining shares of the company. Of the 500 million shares to be sold, 200 million will be bought by General Motors at $27.50 per share. The remaining 300 million shares will be sold in an orderly fashion over the next 12-15 months.

In overnight news, the Euro currency hit a fresh seven-month high and European stocks rallied in the wake of a big credit rating upgrade for Greece by Standard & Poor's. There was also a positive German Ifo report for December released Wednesday. On the negative side, the Euro zone construction industry showed its sharpest decline in several months in October. Reports also said Spain's prime minister will not request fresh European Union bailout funds at this time, but may in the future.

The dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.3% on Wednesday.

Among economic data expected for the day at Wall Street, November housing starts hit an annualized rate of 861,000 units and the number was below the 875,000 forecast. Meanwhile, building permits came in at 899,000, which was ahead of consensus which expected a reading of 876,000.

The Bank of Japan is expected to deliver its third dose of monetary stimulus in four months on Thursday in a prelude to more aggressive action next year, as it faces intensifying pressure from the country's next leader for stronger efforts to beat deflation.

Bullion metals extended their losses at Comex on Wednesday, 19 December 2012. Prices fell despite a weak dollar. Recent geopolitical developments have reversed some of the safe-haven trader and investor plays taken in recent months. This is evidenced by the recent strong selling pressure in the dollar index and in the safe-haven U.S. Treasury bond. Gold, too, is a safe-haven investment asset, and to a lesser degree silver.

Gold for February delivery fell $3 (0.2%) to settle at $1,667.7 an ounce on the Comex division of the New York Mercantile Exchange on Wednesday. Gold fell to three and half month low figures. On Wednesday, March silver fell $0.55, or 1.8%, to settle at $31.12 an ounce.

Crude oil prices ended higher for fourth straight day on Wednesday, 19 December 2012 at Nymex. Mixed US economic data on housing front, less than expected drop in crude supplies and lower dollar took oil prices higher for the day. On Wednesday, light and sweet crude oil futures for light sweet crude for January delivery closed higher by $1.58 (1.8%) at $89.51/barrel. February oil which became the front-month contract after the Nymex close, ended at $89.98 a barrel, up $1.58, or 1.8%, for the session.

In the latest weekly inventory report, the EIA reported today that that U.S. crude supplies fell by 1 million barrels for the week ended 14 December 2012. Market had expected a 2.3 million-barrel decline. The report also stated that motor gasoline supplies rose by 2.2 million barrels, but distillate stocks, which include heating oil, declined 1.1 million barrel. Market had forecast a rise of 2 million barrels for gasoline inventories and a climb of 1.5 million barrels in distillate supplies.

Decliners outran advancers on the New York Stock Exchange, where nearly 751 million shares traded. Composite volume exceeded 3.8 billion.

Indian ADRs ended mixed on Wednesday. In the Banking space, ICICI Bank was up 0.2% and HDFC Bank lost 0.5%. In the IT space, Infosys was up 0.8% and Wipro was up 1.4%. In the Telecom space, MTNL lost 4.5% and Tata Communication was down 0.5%. In the other space, Sterlite was up 1.7%, Tata Motors was up 1.1%. Dr Reddys was up 0.33%.

For tomorrow, in terms of economic data, weekly initial and continuing claims will be reported at 8:30 ET. In addition, the third estimate of third quarter GDP and the GDP deflator will also be released at 8:30 ET. Lastly, November existing home sales, December Philadelphia Fed Survey, November leading indicators, and October FHFA Housing Price Index are all set to cross the wires at 10:00 ET. Earning reports will continue to trickle in.

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