Adverse Reports on Budget Negotiation Deal Affect the US Stocks Adversely

After reaching its 2-month high, the Standard & Poor’s 500 Index has gone down because of the concerns that negotiations on the budget deal are deteriorating. Incidentally, the White House has already threatened to veto the current Republican budget plan. So far, S&P’s 500 Index has plummeted by 0.2% and is at 1443.84. On a whole, this benchmark index has increased by 15% in 2012. The Dow Jones Industrial Average has also gone down by 12.01 points and is currently at 13338.95.

The Chief Executive Officer of Contango Capital Advisors, George Feiger stated that there are no factors other than the fiscal cliff negotiations that can cause any harm to the US equities in present situation. He added that if the policy makers get through the negotiations with a good enough result, the US equities are expected to do better results in 1st half of 2013. However, he commented that if the negotiations don’t yield any decision, the US is likely to slide into another recession.

Incidentally, The Communications Director of White House, Dan Pfeiffer announced that Barack Obama, the US President will veto a spending cuts and tax proposal from John Boehner, the House Speaker as the same would be putting the middle class people under huge burden.

Coming to the stocks, the biggest aluminum producer in US, Alcoa went down by 3% and is at $8.64 currently. The largest issuer of Credit Card in US, American Express shares have also plummeted by 1.2%. The Chief Operating Officer of American Express, Kenneth Chenault has reportedly been approached by Obama to take over the post of Treasury Secretary in Obama’s 2nd term as President. However, amidst all the losses, General Motors have increased by 8% as it announced the plans of buying 200 million shares from the US Government. On the other hand, Knight Capital Group also surged by 5.7% as it has agreed to the takeover proposal of Getco LLC.

The biggest database-software maker in the world, Oracle has also advanced by 4.3% and is at $34.29 per share now. The 2nd fiscal quarter reports of the same have been better than the initial estimates and this have helped the company’s shares. Alterra Capital Holdings shares increased by 24% after it agreed to be bought by Markel, which experienced a drop of 7.9%.