Pre-Market Primer: Hopes of Fiscal Cliff Compromise Lift Stocks

By Vincent Trivett  DEC 06, 2012 8:45 AM

Post-Sandy jobless claims are winding down.


MINYANVILLE ORIGINAL Stock futures were mostly flat today on hopes that House Republicans will find common ground with the White House to resolve the fiscal cliff debate, and the bulge of post-Hurricane Sandy jobless claims decreased.

Initial claims for unemployment insurance totaled 370,000 last week. Economists expected 10,000 more as the effects of Hurricane Sandy impact the job market. Two weeks ago, 395,000 Americans filed for jobless benefits, according to an upwardly-revised figure. Tomorrow, the November jobs report is expected to show that just 86,000 jobs were added to the economy, the smallest gain since the summer.

Dow (INDEXDJX:.DJI) futures inched up 0.03% to 13,028 before the opening bell. Futures contracts on the S&P 500 (INDEXSP:.INX) slipped 0.01% to 1,408.20 and Nasdaq (INDEXNASDAQ:.IXIC) futures fell 0.07% to 2,635.75.

Yesterday, stocks rose dramatically after 40 House Republicans defected from party orthodoxy and called for compromise with President Barack Obama's plan for dealing with the fiscal cliff issue. House Speaker John Boehner insists that any revenue increases for the government will have to come from eliminating tax loopholes and cutting entitlement spending. Increases in rates on the rich are off limits. The 40 Republicans, together with 40 Democrats, wrote a letter to both parties' leaders insisting that "all options for mandatory and discretionary spending and revenues must be on the table," including rate increases for the wealthy.

Apple (NASDAQ:AAPL) and Samsung (KRX:005930) will go back to court to squabble over the $1.05 billion design patent infringement judgment against the Korean electronics company. Samsung is hoping to reduce the damages and Apple is hoping to squeeze another $535 million.

Garmin (NASDAQ:GRMN) shares rose 4.5% as it will join the S&P 500 index. The company is the largest maker of mobile navigation systems.

Eurozone GDP contracted by 0.1% in the third quarter, after shrinking 0.2% in the second. Exports outside of the eurozone helped save the region from a deeper recession. Germany's factory orders rose 3.9% in October after declining by 3.3% in September.

Italian bond yields snapped up today after Silvio Berlusconi's People of Freedom Party walked out of the Senate ahead of a confidence vote on Prime Minister Mario Monti's economic policies. The pressure on Monti's government is ratcheting up, and if the prime minister loses support from his coalition, elections might be called. Berlusconi himself continues to hint that he is considering throwing his hat into the ring.

The Bank of England voted to leave the Bank Rate at 0.5% and continue its level of asset purchases of 375 pounds. This is the first meeting since former Bank of Canada head Mark Carney took charge of the British central bank. Today, the European Central Bank also left rates unchanged, at 0.75%.

Standard & Poor's cut Greece's credit rating to selective default from CCC. Once the debt buyback deal that eurozone finance ministers agreed to takes place later this month, S&P will likely return Greece to CCC. The Mediterranean country's unemployment rate rose to a record 26% in September, making it even worse off than Spain.

Twitter: @vincent_trivett
No positions in stocks mentioned.

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