The market is lower again in early trading as hopes for a deal to avoid the fiscal cliff fade. The market did get a pop from its early lows when a headline came across that Obama was going to propose a new plan which would scale back budget plans and renew tax cuts for all but top earners. But this headline isn't really new, and I suspect the positive reaction will fade.
Although the action has been negative lately as hopes for a deal fade, longer term it might work out better as whatever deal that gets reached will have had more time to hatch vs. a hastily slapped together deal. We have also not heard anything about the debt ceiling expiring.
In economic news, pending home sales rose 1.7% in November. Also, the Chicago PMI rose to 51.6 in December from 50.4 the prior month.
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Asian markets were higher across the board overnight, led by a 1.2% gain in China. But European markets are lower amid weak economic data. French GDP was revised lower to 0.1% in Q3. Spanish retail sales declined -7.8% yr/yr. And Italy auctioned off 5- and 10-yr debt, but was only able to place 5.88 billion euros of the 6 billion target. 10-year notes garnered a yield of 4.48%, slightly above the November auction's yield of 4.45%.
The dollar is up a little today, and most commodities are weak. Oil prices are a bit lower to $90.70, and gold prices are lower near $1656. Silver and copper prices are lower as well.
The 10-year yield is flat near 1.71%. And the volatility index (VIX) continues to creep higher, up 3.6% today to 20.18. These are levels we haven't seen since July. But at that time the market was starting to move higher.
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Trading comment: The S&P 500 had a late rally yesterday to recapture its 50-day average. It would have been a positive if the market could have built on that positive reversal and added to it today. It's still early, so anything could happen, but so far the market is weak again and the SPX is falling back below that 50-day support. Volume is also light on this Friday ahead of the New Year's weekend. Although the market is open on Monday, many traders might just pack it in and take a long 4-day weekend.