While you were sleeping: Fiscal cliff looming larger

Dec 14 (BusinessDesk) – Wall Street declined as US House Speaker John Boehner renewed concern about the lack of progress in talks aimed at preventing US$600 billion in tax increases and spending cuts taking effect on January 1.

"Unfortunately, the White House is so unserious about cutting spending that it appears willing to slow-walk our economy right up to the 'fiscal cliff,'" Boehner told a news conference.

Failing to reach a deal to avoid the so-called fiscal cliff could push the world's largest economy into recession next year, the non-partisan Congressional budget office has forecast. Further evidence of the glacial pace of negotiations has increased uncertainty about the outlook for the economy and corporate profits.

"There's a lot of confusion. Nobody knows what's going to happen with the cliff," Tom Schrader, managing director of US equity trading at Stifel Nicolaus Capital Markets in Baltimore, told Reuters.

In afternoon trading in New York, the Dow Jones Industrial Average fell 0.44 percent, the Standard & Poor's 500 Index shed 0.56 percent, while the Nasdaq Composite Index dropped 0.75 percent.

Positive economic data, while welcome, did little to help the mood. New claims declined 29,000 to a seasonally adjusted 343,000, according to the Labor Department.

"The labour market might be improving a bit quicker than expected," David Sloan, an economist at 4Cast in New York, told Reuters.

And two separate reports from the Commerce Department showed that retail sales increased 0.3 percent last month, following a 0.3 percent slide in October, while business inventories gained 0.4 percent in October.

Shares of Best Buy soared, last up 14.9 percent, after a report in the Minneapolis Star-Tribune newspaper that company founder Richard Schulze will offer to buy the consumer electronics retailer by the end of the week.

In Europe, the Stoxx 600 Index ended the day with a 0.4 percent drop from the previous close. That was its first drop this month, according to Bloomberg. National benchmark stock indexes declined in Frankfurt, Paris and London, falling 0.4 percent, 0.1 percent and 0.3 percent respectively.

Standard & Poor's today cut its crediting rating outlook for the UK to negative from stable.

Meanwhile, UBS faces a fine of about US$1 billion next week to settle charges of rigging the Libor interest rate benchmark, Reuters reported, citing a person familiar with the situation.

"The global settlement is about US$1 billion," the source told Reuters on Thursday. "It's expected early next week -- on Monday or Tuesday."

(BusinessDesk)

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