Stocks eke out tiny gains as Greece nears bailout
U.S. stocks eked out the tiniest of gains on Monday morning, small comfort after worries about the fiscal cliff sent the market plunging last week.
Investors were holding on to a small piece of good news out of debt-riddled Europe: Greek lawmakers passed a new austerity budget, and the other countries that use the euro issued a “positive” report on the country. Greece is hoping the other euro countries will give it another $40 billion in bailout loans, and the budget and the report are crucial steps.
The gains in U.S. stocks were small. The Dow Jones industrial average was up 10 points, or 0.08 percent, to 12,825 in early trading.
The Standard & Poor's 500 index was up two points at 1,382. The Nasdaq composite was up 12 at 2,917. Trading was light. The federal government and the U.S. bond market were closed for Veterans Day, and there were no economic reports scheduled for release.
The so-called fiscal cliff still weighed heavily on traders’ minds. That's when government spending cuts and higher taxes are scheduled to kick in at the beginning of the new year, unless a divided Congress and the White House can work out a compromise before then.
Whatever happens, the fight over the budget is sure to be high drama, and it's likely to pitch the stock market back and forth until it's resolved. Economists say the cliff could cost the economy $800 billion and 3 million jobs, and plunge the U.S. back into recession.
With the election over and investors freed up to worry about the fiscal cliff instead, last week was one of the year's worst. The Dow dropped 434 points in two days, its worst two-day plunge in a year. It eked out only the tiniest of recoveries on Friday, rising 4 points, or 0.03 percent.
President Barack Obama, a Democrat, and House Speaker John Boehner, a Republican, have spoken of compromise but appear to be taking firm stances on some issues. Obama will meet with labor representatives as well as other progressive groups Tuesday. He'll hold separate meetings with the business community Wednesday.
The effect on the markets has been widespread. Fiscal cliff worries were blamed for keeping a lid on European markets, which were trading mixed in the morning, and Asian markets, which ended mixed.
Traders also tempered their enthusiasm over the developments in Greece. The new bailout isn't a sure thing: Some of the countries who would lend the country money have to ask their parliaments for approval. Greece's main stock market index was down more than 3 percent in the morning.
Throughout Europe, there were other reminders that the debt crisis is far from solved. The Banking Association of Spain, a country where hundreds of thousands of borrowers have fallen behind on their mortgages, said it would curb evictions of some struggling homeowners. In Portugal, demonstrators planned protests against a scheduled visit from German Chancellor Angela Merkel. Germany helped bail out Portugal last year and insisted that the government there cut spending as a condition of getting the money, a sore point for some in Portugal.
Among U.S. stocks making big moves, Leucadia National announced it would buy the investment banking firm Jefferies Group, though the Jefferies chief will run the combined company. Leucadia, a holding company with investments in an eclectic set of industries including beef processing and medical products, dropped nearly 5 percent, or $1.03, to $20.77. Jefferies soared $1.83 to $16.10.