Goldman Sachs: Financial Winner
There was also a relatively small bank deal on Tuesday, with Capital One (COF) announcing that it had agreed to sell its $7 billion portfolio of Best Buy (BBY) credit card receivables to Citigroup(C) , for undisclosed terms. Acquisitions are among the strategies being considered by Citigroup to realize profits from its $55 billion in deferred tax assets .
Citigroup's shares rose 1.5% to close at $44.50. Capital One was down 2% to close at $53.12, following disappointment on Friday over the company's sharp decline in credit card balances .
Bank stocks moved in line with the broad indexes. The KBW Bank Index (I:BKX) rose 1% to close at 55.46, with all but five of the 24 index components showing gains for the session.
Some investors were jittery as 2012 drew to a close and negotiations in Washington over the fiscal cliff brought the U.S. closer to a massive combination of federal spending cuts and tax increases, which were averted with a compromise deal early in January. However, there seems to be little worry over the "sequestration" that may take place on March 1, without another compromise deal between Congress and President Obama. This latest fiscal deadline is a set of federal spending cuts totaling $1.2 trillion over a 10-year period, including an $85 billion spending reduction for the current fiscal year.
The Congressional Budget Office has estimated that the spending cuts could slow U.S. GDP growth by 0.6% this year and 1.25% during 2014. Speaking at the White House on Tuesday, President Obama on Tuesday said that the "meat cleaver approach" of the spending cuts "will jeopardize our military readiness," and add "hundreds of thousands of Americans to the unemployment rolls." The president also said that the cuts "won't consider whether we're cutting some bloated program that has outlived its usefulness, or a vital service that Americans depend on every single day."
The Republican leadership in Congress seems unlikely to agree to a compromise that includes tax increases, following the tax increases that helped avert the fiscal cliff.
Following the President's speech, Speaker of the House John Boehner (R-Ohio) said in a statement that "the president advanced an argument Republicans have been making for a year: his sequester is the wrong way to cut spending."
"Just last month, the president got his higher taxes on the wealthy, and he's already back for more," Boehner said, adding that "replacing the president's sequester will require a plan to cut spending that will put us on the path to a budget that is balanced in 10 years."