Wall Street stocks fell for a fifth straight day on last Friday, dropping 1 percent and marking the S&P 500′s longest losing streak in three months as the federal government edged closer to the “fiscal cliff” with no signs of solution.
The Dow closed below 13,000 for the first time since December 4. Trading volume was 13 percent below the 30-day average. The VIX, the benchmark gauge of U.S. equity options, rallied for a sixth day. Ten-year Treasury yields were down three basis points at 1.72 percent while commodities were little changed. The yen fell 0.5 percent to 85.99 per dollar, near the lowest level since August 2010.
The Nasdaq finished the week down 2 percent. In contrast, the VIX jumped 22 percent for the week.
Pessimism continued after the market closed, with stock futures indicating even steeper losses. S&P 500 futures dropped 26.7 points, or 1.9 percent, eclipsing the decline seen in the regular session.
All 10 S&P 500 sectors fell during Friday’s regular trading, with most posting declines of 1 percent, but energy and material shares were among the weakest of the day, with both groups closely tied to the pace of growth.
An S&P energy sector index (.GSPE) slid 1.8 percent, with Exxon Mobil (XOM) down 2 percent at $85.10, and Chevron Corp (CVX) off 1.9 percent at $106.45. The S&P material sector index (.GSPM) fell 1.3 percent, with U.S. Steel Corp (NYS:X) down 2.6 percent at $23.03.
“I was stunned Obama didn’t have another plan, and that’s absolutely why we sold off,” said Mike Shea, managing partner at Direct Access Partners LLC in New York. “He’s going to force the House to come to him with something different. I think that’s a surprise. The entire market is disappointed in a lack of leadership in Washington.”
With time running short, lawmakers may opt to allow the higher taxes and across-the-board federal spending cuts to go into effect and attempt to pass a retroactive fix soon after the new year. Standard & Poor’s said an impasse on the cliff wouldn’t affect the sovereign credit rating of the United States. (Reuters)
