When things seem to be going perfectly, it pays to take a second look and make sure there's substance behind the scenes.
After a couple of days of hearing both sides swagger about the potential for a favorable deal, old-style politics came back into play today, with House Speaker John Boehner pushing a "Plan B" proposal to raise tax rates on those with incomes of $1 million or more and President Barack Obama threatening to veto the measure if it gets to his desk. That apparent breakdown got investors worried for the first time this week, and by the close, the Dow Jones Industrial Average (^DJI 0.15%) had fallen nearly 100 points, although the Nasdaq Composite (^IXIC +0.36%) had much more modest losses of about a third of a percent.
Just a few Dow components were able to scratch out gains for the session. Intel (INTC 0.24%) gained two-thirds of a percent. While many have concluded that Intel needs to focus entirely on mobile devices, a few people are starting to realize that stationary devices like PCs will always be necessary for power users. If Intel could make people want to buy PCs again, perhaps with a technological breakthrough resulting in increased speed and performance, then it could bring a new renaissance to Intel's core business.
United Technologies (UTX +4.86%) posted gains of about 1%, with analysts generally pointing to favorable housing data as a reason for the advance. Longer term, United Tech should be able to ride on the coattails of the strong aerospace industry, especially with its acquisition of Goodrich now complete.
Finally, Caterpillar (CAT +1.52%) inched upward fractionally. The fiscal cliff has already created headwinds for the overall economy, but smart investors are looking beyond the eventual resolution to focus on global growth prospects. Barring an unexpectedly bad result in the cliff negotiations, Caterpillar is poised to pounce on better growth in China and elsewhere throughout the world.
