Stocks closed out the week on a bad note as traders continued to fret over the fiscal cliff.
In Washington, President Obama met with Harry Reid, Mitch McConnell, John Boehner, and Nancy Pelosi in an effort to break the deadlock before the year-end deadline.
While no concrete news was announced during the trading day, news reports indicated that President Obama would offer a scaled back budget plan with a tax increase on top earners, with a delay in some spending cuts and an extension for unemployment benefits.
Late in the afternoon, headlines crossed that Obama would not be offering a new plan, sending stocks sharply down into the close.
However, we've seen a lot of false rumors regarding the fiscal cliff in recent weeks, so it's important to take all of the "news" with a grain of salt.
Nonetheless, while the market was down, there were some bright spots. We saw significant outperformance in small caps and emerging markets, indicating that some market participants were in a "risk-on" kind of mood.
In economic news, the December Chicago PMI was slightly better than expected at 51.6. Additionally, the November pending home sales number came in at 1.7% vs. the 1.0% consensus.
Tomorrow's Financial Outlook
On Monday, we will see a host of economic data, including the December ISM Index, the November construction spending report, and December auto/truck sales.
Also, note that the House of Representatives scheduled a Sunday meeting, and any related news could move the market.
Overall, though, it should be a slow day as Monday is New Year's Eve.
No positions in stocks mentioned.
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