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Stocks reversed early losses and finished the day in the black. That reversal may well be linked to positive comments from Speaker Boehner and President Obama regarding the potential for a compromise on negotiations regarding the fiscal cliff, which could cost the U.S. several points of GDP growth if lawmakers don't stay $600 billion in automatic spending cuts and tax increases. Against this backdrop, the Dow Jones Industrial Average (INDEX: ^DJI ) was flat and the broader S&P 500 (INDEX: ^GSPC ) both finished the day up 0.8%.
Today, President Obama met with a group of corporate leaders, including the CEOs of Caterpillar (NYSE: CAT ) and Goldman Sachs (NYSE: GS ) . Tomorrow, outgoing Treasury Secretary Tim Geithner will head to Capitol Hill to try to light a fire under Congressional leaders' posteriors.
More fiscal cliff: In this morning's column, I highlighted the fact that companies were initiating special dividends or bringing ordinary dividend payouts forward in anticipation of the fiscal cliff, which could mean a significant increase in the dividend tax rate next year from its current 15% level. This afternoon, Dow component Disney (NYSE: DIS ) announced that it is raising its annual dividend by 25% and will pay the dividend on Dec. 28. If you're interested in wealth-creating juggernauts like Disney, click here to receive our free report, "3 Dow Stocks Dividend Investors Need."
Yet more fiscal cliff: According to the Federal Reserve's Beige Book, which collects anecdotal data from businesses across the country, uncertainty about the fiscal cliff and federal budget negotiations is beginning to seep into the fabric of corporate America -- which certainly isn't helpful as far as spurring business spending and investment. Investors are naturally concerned, too, which is why we'll be running a series of articles on the fiscal cliff next week. In the meantime, this is what Warren Buffett had to say on the topic two days ago.