Stocks edge higher, shrugging off Greece jitters
Published 10:28 am Tuesday, November 13, 2012
The stock market shrugged off a sluggish start and inched higher in morning trading Tuesday. A surge in Home Depot’s stock lifted the Dow Jones industrial average.
Stocks had opened lower after European leaders postponed the latest aid package for Greece, which sent stocks lower in Europe.
After the first hour of trading, the Dow Jones industrial average was up 31 points at 12,845. Most of the gain was attributable to Home Depot, which surged 5 percent after delivering a strong earnings report that beat analysts’ expectations.
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The Standard & Poor’s 500 index was up two points at 1,382. The Nasdaq composite index fell eight points to 2,896.
European stock markets fell after finance ministers there postponed $40 billion in desperately needed aid for Greece. The decision surprised investors since just one day earlier there was word that leaders had prepared a “positive” report on the Greece, making it appear likely that the aid would be released.
Instead, Greece’s neighbors decided to give it two more years to meet its economic targets. They still disagree with the International Monetary Fund, another key lender, over how to manage the country’s debt over the long-term. Until they reach an accord, they can’t release the billions that Greece needs to meet upcoming payments to creditors.
IMF managing director Christine Lagarde said Greece should reduce its debt burden down to 120 percent of its economic output by 2020, the original target of 2020. But Jean-Claude Juncker, leader of the euro zone’s finance ministers, said that the deadline would likely be changed to 2022. The lenders will meet again on Nov. 20.
Benchmark indexes fell 0.7 percent in Germany and 0.5 percent in France and Britain.
U.S. investors are trading against the backdrop of the “fiscal cliff,” a set of government spending cuts and tax increases that will take effect automatically at the beginning of next year unless the White House and a divided Congress can reach a compromise before then.
Nerves about the fiscal cliff pushed U.S. stocks last week to one of their worst weekly losses of the year after voters re-elected President Barack Obama and a deeply divided Congress. Obama was set to meet Tuesday with labor leaders and others who advocate higher taxes on the wealthy and want to protect health benefits for seniors and other government programs. Obama will meet with business leaders Wednesday.
The yield on the 10-year Treasury note slid to 1.60 percent from 1.64 percent late Friday as demand increased for ultra-safe investments. The U.S. bond market was closed on Monday in observance of the Veterans Day holiday.
Among stocks making big moves:
Microsoft plunged 4 percent after it announced the departure of Steven Sinofsky, who ran its Windows division. The unexpected move comes just weeks after Microsoft launched Windows 8, its first major overhaul in years of the operating system used on most of the world’s computers. Microsoft fell $1.09 to $27.13.
Home Depot soared $2.93, or 4 percent, to $64.90 after the big-box home improvement retailer said the gradual housing recovery boosted its net income in the fiscal third quarter.
Weatherford International plunged 12 percent a day after the oilfield services company reported disappointing third-quarter revenue and said it had uncovered “material weakness in internal controls over financial reporting related to the accounting for a percentage of completion contract in Iraq.” Weatherford took write-downs in the first and second quarters because of them. Its stock fell $1.34 to $9.54.