Dividend Stocks Under Pressure as Fiscal Cliff Looms

By Minyanville Staff  NOV 13, 2012 5:15 PM

Today's financial recap and tomorrow's financial outlook.


MINYANVILLE ORIGINAL Pre-market, futures were as much as 1% lower for the S&P 500, but recovered by the open due to news reports from Germany that the three aid tranches scheduled to be paid to Greece by the end of the year would be paid in one package. Although there was a strong intraday bounce, potentially rejecting the downward action today, that rejection was rejected by the end of the day as we revisited the lows.

Earlier in the morning, Greece successfully sold 4 billion euros worth of short-term bills with the option to sell an additional 1 billion, thus averting the "financing cliff." On Friday, Greece would have had to pay back 5 billion euros in three-month bills and did not have the cash on hand to do so. To accommodate this, the ECB altered its collateral rules to allow Greek banks to obtain the necessary funding to purchase these bills.

Dividend stocks came under considerable pressure today, as tax-related selling associated with the fiscal cliff continued. Stocks with dividend yields over 7% have now fallen as much as 15%. These stocks include MLPs, REITs, mREITs, utilities, and consumer staples.

In commodities, natural gas futures rose on the perceived increase in demand due to Hurricane Sandy and the cold wave that followed it. The EIA will report natural gas inventories on Thursday morning. Palladium futures also rose due to supply constraints from mine closings last year in South Africa and production slowdowns from Russia.

After the close, Cisco (NASDAQ:CSCO) reported strong earnings beating on both earnings and revenues. In post-market trading, Cisco rose as much as 7% from the closing price.

Tomorrow's Financial Outlook

Tomorrow morning, the US will report retail sales from the prior month. Due to winter storms and Hurricane Sandy, it is widely expected that this report will show a contraction on a month-to-month basis from 1.1% to -0.2%. Also to be released is the monthly producer price index.

In the afternoon, the FOMC will release the transcript of its October 24 meeting. There is no wide expectation of anything groundbreaking to be released, but there should be mentions of quantitative targeting for the Fed funds rate.

Globally, the UK will release its employment report from the past month and the eurozone will report industrial production. Earlier this month, German factory orders and industrial production showed a major decline, so a miss to the downside would not be totally unexpected. In Asia, China will release the figures for actual foreign capital utilized. This figure is expected to rise modestly from last month.

In earnings, Abercrombie & Fitch (NYSE:ANF), NetApp (NASDAQ:NTAP), Williams-Sonoma (NYSE:WSM), and Staples (NYSE:SPLS) will report earnings.

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