Earlier today, it appeared as if stocks were headed for a lower close. This changed a little before lunch, as traders responded favorably to optimistic remarks from lawmakers on both sides of the aisle about the likelihood of reaching a compromise on the fiscal cliff. With 90 minutes left in the trading session, the Dow Jones Industrial Average (DJINDICES:^DJI) is up 66 points, or 0.51%.
Why the market opened lower then bounced
Stocks got off to a rough start this morning following a downbeat report on housing (link opens PDF). According to data released by the Census Bureau, sales of single-family homes fell 0.3% in October to a seasonally adjusted annual rate of 368,000. In addition, the same figure for the month of September was revised downward to 369,000 from a previous estimate of 389,000.
Also weighing on stocks are concerns about the fiscal cliff, a series of tax increases and spending cuts set to take effect at the beginning of next year in the absence of Congressional action. The current debate hinges on Republicans' willingness to break their pledge against raising taxes, along with Democrats' readiness to respond by scaling back spending programs by the federal government.
Despite heading back to their home districts, lawmakers seem to have made considerable progress over the past few days. Most notably, a number of prominent Republicans have publicly rejected the now-infamous Taxpayer Protection Pledge that they signed with the neoconservative lobbying group Americans for Tax Reform.
Among others, Sen. Bob Corker, R-Tenn., said that he was "not obligated on the pledge," and Sen. Lindsey Graham, R-S.C., stated that "I will violate the pledge, long story short, for the good of the country." House Majority Leader Eric Cantor noted that no one in his home state cared about the pledge; and Sen. Jeff Sessions, R-Ala., admitted that he signed the pledge but went on to say that "we've got to deal with the crisis we face [and] the political realty of the president's victory."
Today, moreover, leaders of both parties struck a positive tone in speeches. In a nationally televised address earlier today, President Obama said: "Our ultimate goal is to get an agreement that is fair and balanced." He then went on to note that "My hope is to get this done before Christmas." Following a similar script, Republican Speaker of the House John Boehner expressed optimism that a deal can be done, saying that he's willing to increase revenues so long as they are accompanied by spending cuts and are not accomplished through higher marginal tax rates.
The market's individual stocks
In terms of individual stocks, the board of Groupon (NASDAQ:GRPN) is purportedly meeting to decide whether to retain the services of the company's founder and chief executive officer, Andrew Mason. After losing nearly 85% of their value since going public at the end of 2011, shares in the daily deal's site are currently up 7% on the news. As Mason himself purportedly admitted: "It would be weird if the board wasn't discussing whether I'm the right guy for the job."
Shares in Green Mountain Coffee Roasters (NASDAQ:GMCR.DL) are also up sharply today after the company reported better-than-expected quarter earnings yesterday after the market closed. Green Mountain has been struggling against short-sellers and allegations of an unsustainable business model since last year. Whether this is a turning point obviously remains to be seen, but with the entrance of Starbucks (NASDAQ:SBUX) into the single-cup brewing market, I'd say it doesn't look good.
And finally, shares in Las Vegas Sands (NYSE:LVS) continue their upward momentum on the back of yesterday's 5% climb. The move follows the casino operator's announcement that it will pay a special dividend to shareholders before the end of the year.