Stock Market Story: Nov. 26
NEW YORK ( TheStreet) -- The major U.S. equity averages opened lower Monday, following the biggest weekly advance since June, as investors continued to feel the drag of uncertainties over the eurozone and the U.S. budget.
The Dow Jones Industrial Average was down 49 points, or 0.38%, at 12,960. The blue-chip index began the session up nearly 6% in 2012.
"Most of these uncertainties have been with us for quite some time, and are now regarded by many as annoyances to resolve rather than obstacles to fear," said Sam Stovall, chief equity strategist at S&P Capital IQ, of ongoing global economic headwinds. "What's more, we believe the manner in which these headwinds are resolved could result in an explosive rally rather than just a sigh of relief. Yet, handled inappropriately, these could end up causing a low flying economy to crash."
Eurozone finance ministers were to reconvene Monday for the third time in recent weeks to negotiate an agreement that might persuade international creditors to unlock the next tranche of bailout money to Greece before mid-December, when the country's next big debt repayment is due.
German Chancellor Angela Merkel and Luxembourg Prime Minister Jean-Claude Juncker on Friday provided reassurances that an agreement would be reached. Meanwhile, previous proposals on reducing the country's debt burden were raised again, including slashing interest rates on loans to Greece, a debt buyback and the European Central Bank's return of profits it generated through its Greek bond holdings.
Over the weekend a German media report indicated that some form of conditional forgiveness might be possible in 2015; however, the official stance in Berlin is that official sector debt forgiveness is not in the cards.
"While there is a good chance that an agreement is reached on Monday, we consider it unlikely that this will make Greek public finances sustainable on anything but paper," noted Michala Marcussen, global head of economics at Societe Generale.
Concerns over the so-called fiscal cliff in the U.S. will also be a main focus for investors as Congress returns to Washington this week.
Aneta Markowska, chief U.S. economist at Societe Generale, noted that part of the cliff concerns preferential tax rates on net investment income, and "the risk is that the capital gains tax could revert from 15% to 25%. At the macro and budget level, the impact hereof is modest, but there is clearly a risk of selling on financial markets into year-end."
The FTSE 100 in London was falling 0.47% on Monday, while the DAX in Germany was down 0.23%.
Japan's Nikkei average settled up 0.24% as exporters got a boost amid anticipation of more easing from the Bank of Japan and a weaker yen. Hong Kong's Hang Seng index closed down by 0.24%.