Stocks opened slightly higher this morning, and as of 10:10 a.m., the Dow Jones Industrial Average (^DJI +0.63%) is up a nominal four points, while the broader S&P 500 (^GSPC +1.08%) is up just 0.13%.
Fiscal-cliff watch
Offer. Counter-offer. Repeat the last sub-routine. That's how a negotiation moves forward, and the process is finally underway with regard to addressing the "fiscal cliff," i.e., the $600 billion in tax hikes and automatic spending cuts that are scheduled to take effect next year. After House Speaker John Boehner dropped his opposition over the weekend to raising taxes on taxpayers earning more than $1 million annually, President Obama came back yesterday with a threshold of $400,000 in annual income (up from his initial offer of $250,000). For good measure, he also agreed to lower the inflation adjustment on Social Security payments.
Talks are clearly gaining momentum, and this latest news could be enough to carry stocks higher today. Click here for our latest fiscal-cliff coverage.
The micro view
Speaking of which, yesterday, Jeffrey Immelt, the CEO of Dow component General Electric (GE +2.01%), said that uncertainty associated with the fiscal cliff had "definitely had a negative impact this year." Immelt spoke after GE lowered guidance for 2012 revenue growth at the conglomerate's industrial businesses from 10% to 8%. Across all businesses, the company expects revenue growth of 3% this year and between 0% and 5% next year. When one considers that these are nominal growth rates and that GDP growth rates are reported on an inflation-adjusted basis, this points to a problem: GE's revenue isn't even keeping pace with economic growth.
Mergers and acquisitions are one solution. GE is reported to be on the verge of reaching an agreement to buy Avio, an Italian supplier of aerospace components, for about $4 billion.
