Stocks Pare Losses, End Flat for the Day
NEW YORK ( TheStreet) -- U.S. stocks made up losses late in the day Friday, ending mostly flat, as investors watched signs of gridlock in talks on the so-called fiscal cliff.
Consumer spending fell as incomes were little changed, prompting a decline in equities earlier in the day.
The Dow Jones Industrial Average added 3 points, or 0.02%, at 13,025. The blue-chip index was up by 6.5% in 2012 before the session began, and gained 0.12% for this week.
The stronger sectors in the broad market were utilities, energy and consumer non-cyclicals. The weaker sectors included consumer-cyclicals, transportation, technology, health care and basic materials. Volume was a mere 3.71 billion shares on the Big Board and 2.04 billion shares on the Nasdaq.
"I think we do ultimately get kind of a deal on the fiscal cliff," said Joanna Shatney, head of research and portfolio manager at Schroders' U.S. large-cap equity team. "It becomes more of a gentle slope rather than a cliff."
"The president and Democrats publicly commented in the last few days they're trying to incorporate fiscal spending cuts and tax increases all in one plan," she said. "I think there are probably two scenarios: One is that we come to some sort of near-term compromise and then come together to negotiate again sometime in '13. That's probably most likely.
"We're assuming for next year for the fiscal cliff or the slope, as I'm calling it now, is that government spending ends up being between a 2 and 3 percentage point drag on GDP, but we've been dealing with government spending drags on the GDP for a couple of years now. So I think it'll be a scenario where GDP growth is modest and definitely below potential, but that still fits in with a modest growth picture for next year."
President Barack Obama used his speech on Friday at a K'nex toy factory in Hatfield, Pa., to get a leg up on House Republicans and others who have resisted his calls for tax increases on the wealthiest 2% of income earners and capital gains and dividend taxes to raise revenue in a new budget.
House Speaker John Boehner, meanwhile, said Friday that there has been a stalemate in the talks with the White House, emphasizing that increasing tax rates is the wrong approach that draws money away from the U.S. economy and is something that small business owners can't afford.