Arab Today, arab today us stocks end week lower following budget deal
Last Updated : GMT 21:48:21
Arab Today, arab today
Arab Today, arab today

US stocks end week lower following budget deal

Arab Today, arab today

Arab Today, arab today US stocks end week lower following budget deal

Washington - AFP

US stocks have spent most of 2013 on an upward tear. But they spent most of last week in retreat. All three indices finished lower after a week that included a US budget deal in Congress, an historic appointment at US auto icon General Motors and a successful initial public offering of the Hilton hotel chain. In the end, the Dow Jones Industrial Average fell 264.84 (1.65 percent) to 15,755.36. The broad-based S&P 500 declined 29.77 (1.65 percent) to 1,775.32, while the tech-rich Nasdaq Composite Index gave up 61.54 (1.51 percent) to 4,000.98. The week's biggest piece of news was a bipartisan budget deal that sets discretionary budget caps for 2014 and 2015, repeals billions of dollars in automatic spending cuts and avoids the prospect of a US government shutdown next year. The deal easily won passage in the House of Representatives, which splintered badly during the October budget melee. The Senate is expected to approve the measure next week. "It's the first time years we've able to reach any kind of compromise," said Jack Ablin, chief investment officer at BMO Private Bank. Greg Peterson, director of investment research at Ballentine Partners, rated the budget deal "astonishing" after the contentiousness of recent budget battles. However, Peterson attributed this week's decline in stocks in part to the progress in the budget. When the Federal Reserve opted against tapering its bond-buying program in the fall, it cited uncertainty over the US budget debate as a factor. But this week's deal could convince the Fed that there is less need for stimulus, Peterson said. "The markets reacted negatively because they thought the agreement would increase the chance of the Fed tapering," Peterson said. The possibility of the Fed tapering is also promoted by improving economic data, including this week's better-than-expected retail sales report. Still, some analysts think the Fed will wait until 2014 to scale back the program. The Fed is scheduled to wrap up a two-day policy meeting on Wednesday. Analysts also cited profit-taking as a factor in the week's equity declines. Money managers had a strong incentive to lock in profits for 2013 given that the S&P 500 had risen more than 25 percent heading into this week. GM highlighted much of the week's corporate news. On Monday, the US Treasury said it had sold its last shares in the largest US automaker, closing the books on the "Government Motors" era that included a painful bankruptcy restructuring. The following morning, GM dramatically announced that it picked company veteran Mary Barra to serve as chief executive, the first woman ever to lead a major car company. "We're dedicated to the customer, we're dedicated to making sure we have great products and we're dedicated to winning," Barra said. The auto company also announced that it was selling its last shares in Ally Financial, its former GMAC finance unit, and divesting a 7 percent stake in French automaker PSA Peugeot Citroen. In other corporate news, shares of Hilton Worldwide Holdings gained 10.5 percent after the company raised $2.35 billion in its IPO. Hilton chief executive Christopher Nassetta emphasized the company's international growth plans and efforts to employ a "capital light" strategy that involves more management and franchising of hotels and less direct ownership. Food service firm Sysco announced the week's most significant merger, a $3.5 billion takeover of rival US Foods. The deal creates a giant in food distribution with $65 billion in annual sales. US airline giant American Airlines formally emerged from bankruptcy and began trading on the Nasdaq, rising nearly 10 percent for the week. Big banks found themselves under the spotlight again after a team of US regulators enacted the Volcker Rule, a long-awaited measure intended to curb risky trading. Next week's news will likely be dominated by the Fed meeting. Besides the Fed meeting, the newsflow includes fresh data on consumer prices, housing starts and industrial production. FedEx is also scheduled to report earnings.

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Arab Today, arab today us stocks end week lower following budget deal Arab Today, arab today us stocks end week lower following budget deal

 



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