Uncertainty Reigns As Apple Weighs On NASDAQ; Europe Rises As Nokia Rallies

[Chart courtesy of MarketWatch.com]

US equities ended mostly higher Wednesday as Wall Street applauded comments from President Obama on the fiscal cliff, and investors lapped up upbeat corporate news, but Apple Inc dragged down the NASDAQ Composite.

On the economic front, the Institute for Supply Management reported a slightly faster pace of growth for the US services sector in November, and the Commerce Department said factory orders rose unexpectedly by 0.8 percent in October.

Separately, payroll processor ADP reported US private-sector employers added 118,000 jobs in November after a revised 157,000 gain in the prior month. Stocks got a leg up after a Labor Department report showed non-farm productivity rose by 2.9 percent in the third quarter, the fastest clip in two years.

The Dow Jones Industrial Average (DJIA) rallied 83 points but ending off the highs of the day. Stocks hit their high points after Bloomberg reported about 40 Republicans have joined a bipartisan call to break the budget impasse with Mike Simpson of Idaho saying he would go along with higher taxes for married couples earning more than $500,000 annually in exchange for reforms on spending entitlements like Medicare. Another Republican Kay Granger from Texas said extending tax breaks for middle-class earnings was the right thing to do.

The S&P 500 Index (SPX) rose 2 points with utilities pacing the gains and technology faring the worst among its 10 business groups.

Bucking the trend, the tech-laden NASDAQ Composite (COMP) tumbled 22.39 points, extending losses into the fourth straight session. Apple Inc shares fell 6.4 percent on concern about rival Nokia bagging a deal in China. There were also reports clearing houses were raising margin requirements on the stock, making it harder for investors to buy the stock.

The benchmark 10-year yield dropped to a two-week low after Treasuries advanced on Wednesday as lack of progress on fiscal cliff talks increased the allure of safe haven assets.

Addressing the annual Business Round table conference in Washington, President Obama made his case for raising taxes for the top 2 percent earners. Warning the Republicans against starting another standoff on the nation’s debt ceiling, the president said it’s a game he’s not willing to play.

The US dollar advanced against major currencies Wednesday after a lukewarm response to a Spanish debt auction drew the focus back on Europe’s unresolved sovereign debt crisis.

Meanwhile, European stocks pushed higher Wednesday after the new Chinese leadership indicated it would continue their supportive policy stance for economic recovery though gains were pared over stalled US budget negotiations.

The Stoxx Europe 600 index climbed 0.2 percent, extending gains for the third straight day. Nokia Corp vaulted 9.7 percent after the Finnish phone-maker said it is launching its latest Lumia smartphone in partnership with China Mobile Ltd, the country’s biggest operator.

Europe’s economic data was also in focus after the region’s composite purchasing manager’s index rebounded in November from a 40-month low in the prior month though private sector output continued to shrink rapidly.

The FTSE 100 index finished 0.4 percent higher in London while the DAX 30 index rose 0.3 percent in Frankfurt.

In the ETF space, Natural gas linked funds rallied after the fossil fuel futures rallied 4.5 percent. The United States Natural Gas Fund (UNG) was among the day’s biggest gainers, rising 3.88 percent for the day.

Our Trend Tracking Indexes (TTIs) moved in opposite directions as the Domestic TTI fell to +1.75%, while its international cousin rose to +5.18%.

Disclosure: No holdings in ETFs discussed above

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About Ulli Niemann

Ulli Niemann is the publisher of "The ETF Bully" and is a Registered Investment Advisor. Learn more
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