After falling 150 points by midday today, the Dow Jones Industrial Average (^DJI +0.50%) battled back to finish trading with just an 18-point loss, or 0.14%. The fiscal cliff was again the major concern for investors, and pessimism ruled the day early on, as valuable time seemed to be ticking away with little movement on either side. Senate Majority Leader Harry Reid said the country appeared to be headed toward the fiscal cliff, which sent stocks hurtling down, but an afternoon call for the House of Representatives to reconvene Sunday gave investors hope that the automatic tax cuts and spending increases could be averted.
Despite the anxiety over the fiscal cliff, macroeconomic reports were overwhelmingly positive today. Initial unemployment claims came in 25,000 lower than expected, at 350,000 for last week, and that brought the four-week moving average, a widely-used gauge of unemployment trends, down to its lowest level since March 2008. New home sales in November also reached their highest level since April 2010, improving by 4.4% over October's total, to 377,000. Both figures bode well for continuing improvements in the economy. The only dark spot was a consumer confidence reading of just 65.1 from the Conference Board. That number was five points below projections, and 6.5 points below November's total. Concerns about the fiscal cliff were the primary reason for the drop.
In spite of the market's recovery, nearly every stock on the Dow was down today. Cisco Systems (CSCO 3.08%) was the biggest loser, falling 1.4%, as the networking leader's performance tends to be heavily tied to the overall business environment. If the country falls off the fiscal cliff, that could put a dent in Cisco's earnings.
Alcoa (AA +0.00%) also fell on fiscal cliff worries, giving back 1.3%, after gaining as much yesterday. The aluminum-maker's fortunes are strongly connected to the overall health of the global economy.
Outside of the Dow, Marvell Technologies (MRVL +3.43%) dropped 3.5% in response to a $1.17 billion verdict against the company in a patent lawsuit with Carnegie Mellon University. A federal jury found that Marvell, which makes chips for computers and mobile phones, violated CMU patents on integrated circuits. The chipmaker will appeal the verdict, and it could win some money back, as the jury had awarded CMU all that it had asked for -- a rare outcome.
Looking ahead to tomorrow, the Chicago PMI and pending home sales are on the docket, and another strong housing report would help confirm positive signs in today's new housing sales jump. Investors should take a day off from fiscal cliff worries, as negotiations will pick up again on Sunday when the House comes back to Washington. Expect Monday to be a busy trading day.
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