Stocks turn up on hints of 'fiscal cliff' deal

 The stock market shot higher on Monday afternoon, in the year's final hour of trading, signaling that investors believe the politicians in Washington will work out a budget compromise to avoid the "fiscal cliff."
The Dow was up 137 to 13,075 in the late afternoon, more than 1 percent. The Standard & Poor's 500 and the Nasdaq composite were up by more, with the Nasdaq rising nearly 2 percent.
It was a high note in what had been a choppy day for the market, as choppy as the "fiscal cliff" deal-making that has been yanking it around.
Stocks opened lower and struggled for direction in the morning. They jerked higher at midday, on reports that the bare outline of a deal to avoid the "cliff" had been knit together. Then, they lost some of those gains when President Barack Obama made an early afternoon appearance to say that a compromise was "within sight," but not finalized. Then, in the late afternoon, they shot higher.
The market's indecisiveness overlaid a day of dramatic budget negotiations in Washington. If Republicans and Democrats can't agree to a new budget deal by midnight, then higher taxes and lower government spending will automatically kick in Tuesday — the so-called fiscal cliff.
That would hurt the economy and could even send it back into recession, many investors believe. But what might hurt more, they add, is the psychological impact of knowing that the government can't agree on a budget.
"We're having a fragile recovery, with the pain of 2008 still fresh on everybody's mind," said Joe Heider, principal at Rehmann Group outside Cleveland. "It's fear of the unknown. And fear is one of the greatest drivers of the financial markets."
The Dow Jones industrial average surged 99 points in midday trading after The Associated Press reported that Republicans and Democrats had agreed on some key aspects of a compromise budget plan. They cooled after Obama made it clear that a deal wasn't done. Then, around 2:45 p.m. EST, they started shooting higher again.
Shortly after 3 p.m. EST, the Standard & Poor's 500 index was up 21 to 1,423 and the Nasdaq composite index was up 57 to 3,017.
Investors' opinions about the "fiscal cliff," and how much it matters, are varied.
Some are unruffled: They're confident that politicians will work out a last-minute deal, as they often do. Or they think that even if the U.S. does go over the "cliff," it would be more akin to the anti-climactic Y2K scare than a true Armageddon. The "cliff's" impact would be felt only gradually, they reason. For example, workers might get more taxes withheld from their first couple of paychecks in the new year, but it's not as if they'd have to pay all their higher taxes up front on Tuesday. And Congress could always retroactively repeal those higher taxes.
Others are more concerned. The higher taxes and lower government spending could take more than $600 billion out of the U.S. economy and send it back into recession. Politically, the U.S. would send a message that its lawmakers can't cooperate. And investors would have no good read on the country's long-term policy for taxes and spending, or how the government plans to eventually trim its deficit.
That's made the fiscal cliff's impact on the stock market uneven. From mid-November through roughly mid-December, the stock market rose more or less steadily, despite the "cliff" looming on the horizon. It wasn't until shortly before Christmas, with still no deal in sight, that the "cliff" finally scared investors enough to send the market down.
Tim Speiss, partner in charge of the personal wealth advisers practice at EisnerAmper in New York, followed the "cliff" negotiations on Monday and wondered if the U.S. would get its debt rating cut again. The Standard & Poor's ratings agency cut its rating of the U.S. government amid similar negotiations in August 2011, when lawmakers were arguing over the government's borrowing limit. S&P said at the time that the "political brinksmanship" highlighted how "America's governance and policymaking (is) becoming less stable, less effective, and less predictable." Its rating cut sent the stock market into a tailspin.
The other major ratings agencies, Moody's and Fitch, have suggested that they might lower their ratings of the U.S. because of the "fiscal cliff."
"That is, unfortunately, the big story," Speiss said.
It's also one of the only stories. There's been little other news to trade on during the holiday season, giving the "fiscal cliff" drama outsized influence. No major companies are scheduled to report earnings this week. The most significant economic indicator scheduled for this week, the government's monthly jobs report, won't be released until Friday.
Trading volume has also been light, with many investors still on vacation. That also makes the market more volatile: With fewer shares trading hands, it can be moved by relatively small trades.
Last week, about 2.2 billion shares traded hands each day on average. Throughout the year, the average has been closer to 3.6 billion.
The yield on the benchmark 10-year Treasury note rose to 1.76 percent from 1.70 percent late Friday, a sign that investors were moving money into stocks.
Some of the best-performing stocks for the year were those that had been hammered in 2011. Homebuilder PulteGroup, appliance maker Whirlpool and Bank of America all more than doubled over the year, after falling by double-digit percentages in 2011.
Some of the worst performers of the year were Best Buy, Hewlett-Packard and J.C. Penney. All are struggling to keep up with competitors who have adapted more quickly to changing technologies and changing customer tastes. They were all up Monday, but were each down at least 45 percent for the year.

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Global shares up on hopes U.S. to avoid 'fiscal cliff'

 Wall Street rallied on Monday and global equities headed for their best year in the last three as U.S. lawmakers closed in on a deal to avoid a budget crisis that many fear could cripple the world economy in 2013.
U.S. President Barack Obama said Congress was close to an agreement that would start chipping away at the deficit without raising middle class taxes.
Senate Republican leader Mitch McConnell also said agreement was "very, very close."
U.S. stocks rose, capping off a strong year on a high note and leaving the MSCI all-world index on track to end the year up 13 percent. U.S. government debt prices fell.
The deal is not likely to provide a long-term road map to reduce the U.S. budget deficit, which has been above $1 trillion for four straight years.
But without it, $600 billion of automatic spending cuts and across-the-board tax increases would take effect January 1, a blast of austerity that economists fear would thrust the United States into recession and hurt world growth.
"Traders understand that this is a stop-gap measure, but they'll take it," said Quincy Krosby, market strategist at Prudential Financial in Newark. "Markets can rally with some growth, but not with no growth. For now, they don't mind kicking the can down the road."
The Dow Jones industrial average was up 150.93 points, or 1.17 percent, at 13,089.04. The Standard & Poor's 500 Index was up 21.80 points, or 1.55 percent, at 1,424.23. The Nasdaq Composite Index was up 59.94 points, or 2.02 percent, at 3,020.25.
European shares also gained after a quiet day in Asia, where Japan's Nikkei and other indexes were already closed for 2012.
Despite recent declines on Wall Street and what seemed like a hopeless stalemate in budget talks, the benchmark S&P 500 was up 12.5 percent in 2012 after a nearly flat performance the prior year. The Dow was up 6 percent and the Nasdaq 15 percent.
With the world's major central banks expected to keep pumping stimulus into their economies at any sign of weakness, most economists forecast further gains in equities next year.
Benchmark 10-year U.S. Treasuries fell 16/32 on the pending fiscal cliff deal to yield 1.76 percent. Treasury yields finished the year only slightly above where they started it, thanks to heavy safe-haven buying and the Fed's asset purchase programs aimed at keeping long-term rates low.
STILL RISKS AHEAD
Risks still remain for 2013, investors said.
Europe could lurch back into trouble if slow growth puts further pressure on heavily indebted countries such as Spain and Italy, said Alan Wilde, who helps manage $50 billion at Baring Asset Management in London.
"This pressure point may make acceptance of austere policy measures unpalatable and politicians may find they have to find other ways to cut costs," he said.
In the United States, striking the right balance between growth and deficit reduction will also be a challenge, as will addressing long-term fiscal problems.
"It looks to be another lengthy time of instability and volatility on Wall Street as the real work to address the longer term fiscal health of the U.S. government moves into 2013," said Ron Florance, managing director of investment strategy at Wells Fargo Private Bank.
But in 2012, investors worst fears -- a euro zone collapse, a hard landing in China's once-booming economy and another U.S. recession -- never came to pass.
The pan-European FTSEurofirst 300 gained roughly 13 percent this year, largely due to the European Central Bank's vow to tackle the region's debt crisis, and recovered from an early morning dip to end the year at 1,131.64.
Peripheral euro zone bonds also rallied after a roller coaster year. Yields on Spanish and Italian sovereign bonds, a measure of the compensation creditors demand for lending to those governments money, spiked in the summer but have since fallen sharply. Euro zone bond markets were closed on Monday.
The euro was down 0.2 percent at $1.3191 but was up 2 percent for the year. An agreement on the U.S. budget would also be viewed as positive for the euro because it would help boost global growth.
Against the yen, the dollar hit 86.64, its best showing since mid-2010, and was set to end the year 12 percent firmer against Japan's currency, its biggest gain since 2005.
With a new Japanese government led by Prime Minister Shinzo Abe expected to pursue a policy mix of aggressive monetary easing and heavy fiscal spending to beat deflation, analysts see the yen staying under pressure in 2013.
Commodities also found recent support as economic data in key emerging economies such as China have started pointing to a gradual pick-up in the pace of growth in 2013.
Gold was $1,675.60 an ounce, up more than 6 percent for the year and on track for a 12th consecutive year of gains. Rock-bottom interest rates, concerns over the financial stability of the euro zone, and diversification into bullion by central banks have boosted the metal. Copper also rose, ended the year up 6 percent after a late rally on Monday.

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Equities rally as U.S. 'cliff' deal nears; oil up

 Wall Street rallied on Monday and global equities finished their best year in the last three as U.S. lawmakers closed in on a deal to avoid a budget crisis that many fear could cripple the world economy in 2013.
U.S. President Barack Obama said Congress was close to an agreement that would start chipping away at the deficit without raising middle-class taxes.
Senate Republican leader Mitch McConnell also said an agreement was "very, very close," though it wasn't clear whether a vote would happen on Monday or be pushed into early 2013.
U.S. stocks rose, capping off a strong year on a high note and leaving the MSCI all-world index on track to end the year up more than 13 percent.
The S&P 500 closed out 2012 with a gain of 13.4 percent in 2012 after a nearly flat performance the prior year. The Dow was up 7.3 percent and the Nasdaq nearly 16 percent.
Oil prices edged higher on Monday on optimism over a budget deal, while U.S. government debt prices fell.
The budget deal is not likely to provide a long-term road map to reduce the U.S. budget deficit, which has been above $1 trillion (616 billion pounds) for four straight years.
"Traders understand that this is a stop-gap measure, but they'll take it," said Quincy Krosby, market strategist at Prudential Financial in Newark. "Markets can rally with some growth, but not with no growth. For now, they don't mind kicking the can down the road."
Without a deal $600 billion (369 billion pounds) of automatic spending cuts and across-the-board tax increases would begin to take effect January 1, a blast of austerity that economists fear would thrust the United States into recession and hurt world growth.
The Dow Jones industrial average was up 150.93 points, or 1.17 percent, at 13,089.04. The Standard & Poor's 500 Index was up 21.80 points, or 1.55 percent, at 1,424.23. The Nasdaq Composite Index was up 59.94 points, or 2.02 percent, at 3,020.25.
European shares also gained after a quiet day in Asia, where Japan's Nikkei and other indexes were already closed for 2012.
With the world's major central banks expected to keep pumping stimulus into their economies at any sign of weakness, most economists forecast further gains in equities next year.
Benchmark 10-year U.S. Treasuries fell 16/32 on the pending fiscal cliff deal to yield 1.76 percent. Treasury yields finished the year only slightly above where they started it, thanks to heavy safe-haven buying and the Fed's asset purchase programs aimed at keeping long-term rates low.
STILL RISKS AHEAD
Risks remain for 2013, investors said.
Europe could lurch back into trouble if slow growth puts further pressure on heavily indebted countries such as Spain and Italy, said Alan Wilde, who helps manage $50 billion (30 billion pounds) at Baring Asset Management in London.
"This pressure point may make acceptance of austere policy measures unpalatable and politicians may find they have to find other ways to cut costs," he said.
In the United States, striking the right balance between growth and deficit reduction will also be a challenge, as will addressing long-term fiscal problems.
"It looks to be another lengthy time of instability and volatility on Wall Street as the real work to address the longer term fiscal health of the U.S. government moves into 2013," said Ron Florance, managing director of investment strategy at Wells Fargo Private Bank.
But in 2012, investors' worst fears -- a euro zone collapse, a hard landing in China's once-booming economy and another U.S. recession -- never came to pass.
The pan-European FTSEurofirst 300 gained roughly 13 percent this year, largely due to the European Central Bank's vow to tackle the region's debt crisis, and recovered from an early morning dip on Monday to end the year at 1,131.64.
Peripheral euro zone bonds also rallied after a roller coaster year. Yields on Spanish and Italian sovereign bonds, a measure of the compensation creditors demand for lending money to those governments, spiked in the summer but have since fallen sharply. Euro zone bond markets were closed on Monday.
The euro was down 0.2 percent at $1.3191, but was up 2 percent for the year. An agreement on the U.S. budget would also be viewed as positive for the euro because it would help boost global growth.
Against the yen, the dollar hit 86.64, its best showing since mid-2010, and was set to end the year 12 percent firmer against Japan's currency, its biggest gain since 2005.
With a new Japanese government led by Prime Minister Shinzo Abe expected to pursue a policy mix of aggressive monetary easing and heavy fiscal spending to beat deflation, analysts see the yen staying under pressure in 2013.
Commodities also found recent support as economic data in key emerging economies such as China have started pointing to a gradual pick-up in the pace of growth in 2013.
Gold was $1,675.60 an ounce, up more than 6 percent for the year and on track for a 12th consecutive year of gains. Rock-bottom interest rates, concerns over the financial stability of the euro zone, and diversification into bullion by central banks have boosted the metal. Copper also rose, ended the year up 6 percent after a late rally on Monday.
U.S. crude rose $1.02 to $91.82 per barrel but ended 2012 down more than 7 percent, snapping a string of three straight yearly gains. Brent crude closed 2012 up for a fourth straight year after geopolitical threats offset worries about falling demand. Brent crude averaged more than $111 a barrel in 2012, the highest on record.

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How Not 'Awesome' Was Lisa Jackson at the EPA?

After almost four years of guiding controversial decisions on fracking, the Keystone XL pipeline, and coal, EPA Administrator Lisa Jackson is stepping down. Now, the hunt is on for a new director who won't be able to please anyone.
RELATED: EPA Passes New Fracking Rules
Jackson—the EPA's first African American chief and a chemical engineer by training—wrote in a statement, "I will leave the EPA confident the ship is sailing in the right direction, and ready in my own life for new challenges, time with my family and new opportunities to make a difference." President Obama said in a separate statement:
Under her leadership, the EPA has taken sensible and important steps to protect the air we breathe and the water we drink, including implementing the first national standard for harmful mercury pollution, taking important action to combat climate change under the Clean Air Act and playing a key role in establishing historic fuel economy standards that will save the average American family thousands of dollars at the pump, while also slashing carbon pollution.
Congressional Republicans, however, won't be sad to see her go. Caught between their hostility toward regulation and the Obama administration's lack of emphasis on climate change, Jackson was unable to nix the Keystone XL oil pipeline, a planned route for bringing tar sand oil from Canada down to Texas. When confronted on the issue, Jackson simply said that holding conversations about the project is "awesome." She also wasn't able to get the EPA to take meaningful action on hydraulic fracturing, even after the agency found evidence that the practice contributes to groundwater pollution.
RELATED: EPA Proposes First Fracking-Related Pollution Rules
Among her successes, Jackson can count a rule limiting mercury emissions in coal-fired plants and the doubling of fuel efficiency standards. It remains to be seen whether the EPA's deputy administrator Robert Perciasepe—who looks prepped to take the reigns in the interim and potentially as full-time Administrator later on—can do any better.

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Website helps Dutch Catholics "de-baptize" over gay marriage

 Thousands of Dutch Catholics are researching how they can leave the church in protest at its opposition to gay marriage, according to the creator of a website aimed at helping them find the information.
Tom Roes, whose website allows people to download the documents needed to leave the church, said traffic on ontdopen.nl - "de-baptise.nl" - had soared from about 10 visits a day to more than 10,000 after Pope Benedict's latest denunciation of gay marriage this month.
"Of course it's not possible to be 'de-baptized' because a baptism is an event, but this way people can unsubscribe or de-register themselves as Catholics," Roes told Reuters.
He said he did not know how many visitors to the site actually go ahead and leave the church.
About 28 percent of the population in the Netherlands is Catholic and 18 percent is Protestant, while a much larger proportion - roughly 44 percent - is not religious, according to official statistics.
The country is famous for its liberal attitudes, for example to drugs and prostitution, and in April 2001 it was the first in the world to legalize same-sex marriages.
In a Christmas address to Vatican officials, the pope signaled the he was ready to forge alliances with other religions against gay marriage, saying the family was threatened "to its foundations" by attempts to change its "true structure".
Roes, a television director, said he left the church and set up his website partly because he was angry about the way the church downplayed or covered-up sexual abuse in Catholic orphanages, boarding schools and seminaries.
A report by an independent commission published a year ago said there had been tens of thousands of victims of child sexual abuse in the Netherlands since 1945 and criticized the church's culture of silence.

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Apple still said to account for 87% of North American tablet traffic as Kindle Fire, Nexus 7 gain

Apple’s (AAPL) share of the global tablet market is in decline now that low-cost Android slates are proliferating, but the iPad still appears to be the most used tablet by a huge margin. Ad firm Chitika regularly monitors tablet traffic in the United States and Canada and in its latest report, Apple’s iPad was responsible for almost 90% of all tablet traffic across the company’s massive network.
[More from BGR: Samsung looks to address its biggest weakness in 2013]
Using a sample of tens of millions of impressions served to tablets between December 8th and December 14th this year, Chitika determined that various iPad models collectively accounted for 87% of tablet traffic in North America. That figure is down a point from the prior month but still represents a commanding lead in the space.
[More from BGR: New purported BlackBerry Z10 specs emerge: 1.5GHz processor, 2GB RAM, 8MP camera]
The next closest device line, Amazon’s (AMZN) Kindle Fire tablet family, had a 4.25% share of tablet traffic during that period, up from 3.57% in November. Samsung’s (005930) Galaxy tablets made up 2.65% of traffic, up from 2.36%, and Google’s (GOOG) Nexus 7 and Nexus 10 tablets combined to account for 1.06% of tablet traffic in early December.
“Despite these gains by some of the bigger players in the tablet marketplace, there has been a negligible impact to Apple’s dominant usage share,” Chitika wrote in a post on its blog.

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Apple CEO gets modest 2012 pay after big 2011

 Apple CEO Tim Cook got $4.2 million in pay for the latest fiscal year, a modest sum compared with last year, when the company's board set him up with stock now worth $510 million for taking the reins in 2011.
Cook's pay for fiscal 2012, which ended in September, consisted of $1.4 million in salary, a bonus of $2.8 million, and $17,000 in company contributions to his 401(k) account and life insurance premiums, according to a filing.
Apple Inc.'s board saw no need to give Cook additional shares in 2012 after the sign-on grant of 1 million shares in 2011. Half of those shares vest in 2016 and the other half in 2021. A lot could happen to the value of the shares before Cook can cash them out, but the sign-on grant made him —at least on paper— the highest-paid U.S. CEO in 2011.
Cook did vest into shares worth $140 million in 2012. Those shares were granted earlier, when he was chief operating officer. He had been acting CEO for a while before the death of company co-founder Steve Jobs in October of 2011.
Apple tends to grant shares to executives every other year. Cook's closest cohorts got big grants in 2012, including top hardware engineer Robert Mansfield, who got shares worth $83 million. Chief Financial Officer Peter Oppenheimer and general counsel Bruce Sewell both got stock grants worth just over $66 million, more than double the value of the grants they got two years ago, reflecting the zooming value of Apple's stock.
The Cupertino, Calif.-based company's compensation policies are relatively simple. Missing are many of the perks that other CEOs command, like country club fees and private use of company aircraft.

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