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Fiscal cliff may derail Market momentum gathered in November

Posted By Frazier Allen On Wednesday, December 5, 2012 @ 6:00 pm In Business | No Comments

F&M Investment Services - Raymond JamesClarksville, TN – Even though the market indexes showed little change in November, the end of 2012 looks promising as the U.S. economy rebounded despite a highly contentious election cycle and the devastating effects of Hurricane Sandy thanks to some encouraging numbers from key indicators.

The Dow Jones Industrial Average experienced a post-election trough and ended the month north of 13,000, but still flat compared to the end of October. The NASDAQ mirrored the DJIA, bottoming at 2,837 on November 15th to close at a near month-high at 3,010. Likewise, the S&P 500 rallied from a low of 1,353 for November to end the month at 1,416.

Market

10/31/12 Close

11/30/12 Close

Change

Gain/Loss

DJIA

13,096.46

13,025.58

-70.88

-0.54%

NASDAQ

2,977.23

3,010.24

33.01

1.11%

S&P 500

1,412.16

1,416.18

4.02

0.28%

 

Investors hope momentum will gather through December, and some economic indicators point to such progress. For example, holiday spending over the four-day Thanksgiving weekend was up 9.2% over last year, as Americans are spending more this year. In October, all three housing measures improved – construction was up, existing home sales improved and foreclosures continued to decline on an annual basis. And several reports suggest the job market is improving, as employers added 171,000 jobs in October.

While all this appears positive, the ongoing uncertainty about the so-called fiscal cliff, the package of tax increases and spending cuts scheduled to take effect early next year, continues to cast a pall on our economy and the markets.

Scott Brown, chief economist at Raymond James, says that a deal to avoid the fiscal cliff is unlikely before yearend, although we could see a compromise in early 2013. Whether the markets can sustain the current momentum through what is sure to be a bumpy ride through Washington remains to be seen

Please feel free to reach out to me if you have any questions about the financial markets, year-end tax planning ideas or how to position your financial plan as we look to 2013. I look forward to speaking with you.


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