US stocks end solidly higher on hopes of positive budget talks

For the day, the Dow ended higher by 100.38 points (0.8%) at 13,235.39. Nasdaq ended higher by 39.27 points (1.32%) at 3,010.6. S&P 500 ended higher by 16.78 points (1.2%) at 1,430.4.

Among the ten economic sectors, the financials were the best performing of its 10 major industry groups. The consumer staples sector was the leading laggard. Majority of Dow components finished higher. Bank of America and J.P. Morgan Chase were among the biggest gainers.

Attention of the market place remains on the U.S. "fiscal cliff" tax increases and spending cuts that is fast approaching. House Speaker Boehner and President Obama met again on Monday morning on the matter. The overall situation remains a bearish drag on many markets, including the raw commodities and stock markets.

 

In overnight news, European stocks and the Euro currency were weaker on more dour Euro zone economic news. Euro zone exports were reported down 1.4%, month-on-month, in October. Also, the German Bundesbank said Monday the German economy has seen significant contraction heading into the end of the year.

In Japan, the Liberal Democratic Party was swept into power over the weekend, implicating Japan's monetary policy will remain very accommodative. The Japanese yen was sharply lower against the U.S. dollar on Monday. Along with the U.S. Federal Reserve's commitment to easy money announced last week and the European Central Bank being in the same position, such are bullish underlying factors for the raw commodity markets in the coming months.

The dollar index, which weighs the strength of the dollar against a basket of six other currencies, fell by 0.1% on Monday.

Among economic data expected for the day, the December Empire State Manufacturing Survey registered a reading of -8.1, which was down from the prior month's reading of -5.2, and worse than the reading of 2.0 expected. Separately, the October net long-term TIC flows report indicated a $1.3 billion inflow of foreign capital into U.S. denominated assets. This follows the prior month's $3.3 billion inflow.

The financial sector paced the advance today. Weekend reports indicated House Speaker Boehner has offered to accept a tax hike for top earners if the new revenue is met with spending cuts. However, the White House has rejected the offer. While a deal remains elusive, the presence of discussion between the lawmakers is being received as a positive sign by the market.

In M&A news, Caribou Coffee will be acquired by Joh. A. Benckiser for $16.00 per share. The transaction carries a total value of approximately $340 million, and the purchase price represents a 29.9% premium to Caribou's Friday closing price.

Automakers and manufacturers of auto parts witnessed strength among discretionary stocks. Ford Motor and Cooper Tire & Rubber were up 1.8% and 3.0%, respectively.

Among tech shares, Apple was down as much as 1.5% intraday, but after a brief dip near $500, bargain hunters lifted the largest tech component to a gain of 1.8%. Earlier, Citigroup downgraded the stock to 'Neutral' from 'Buy.' Apple said it sold more than 2 million iPhone 5s in China.

Crude oil prices ended moderately higher on Monday, 17 December 2012 at Nymex. Oil prices rose amid ongoing Middle East tension and thin trading as the holidays and the end of the year are fast approaching. Many traders and investors are winding things down or stepping to the sidelines until January. Manufacturing data at US also impacted prices.

On Monday, light and sweet crude oil futures for light sweet crude for January delivery closed higher by $0.47 (0.5%) at $87.2/barrel.

Developments in the Middle East provided a favorable backdrop for oil futures to move higher. Iran's foreign minister said Monday that the nation's deadlock with major powers over its nuclear program needs to be resolved, which cited a report from an Iranian news agency.

Bullion metals ended steady and hovered near unchanged level at Comex on Monday, 17 December 2012. Gold for February delivery rose $1.2 (0.1%) to settle at $1,698.2 an ounce on the Comex division of the New York Mercantile Exchange on Monday. Prices fell to a low of $1,687.5 during intra day trading. On Monday, March silver fell $0.02, or 0.1%, to settle at $32.28 an ounce.

Advancers outpaced decliners by two to one on the New York Stock Exchange, where volume neared 702 million and composite volume topped 3.4 billion by the close.

Indian ADRs ended mixed on Monday. In the Banking space, ICICI Bank was up 1.1% and HDFC Bank was down 0.7%. In the IT space, Infosys was down 0.5% and Wipro was down 0.2%. In the Telecom space, MTNL was down 4.4% and Tata Communication was down 0.12%. In the other space, Sterlite was up 4.9%, Tata Motors was up 2.6% and Dr Reddys was up 0.3%.

For tomorrow, the current account balance is the only economic report expected. Earning reports will continue to trickle in.

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