Market Review By TraderXP:
The euro traded 0.1 percent from six-week high against the dollar before EU finance ministers meet in Brussels today amid optimism the region can find a solution to the debt crisis.
"Euro sentiment brightened and there is reason for optimism," said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. "I still can not help but think that the missing ingredient for a sustainable income for a better economic data from Europe."
Jones predicts the euro will be at $ 1.30 on December 31.
Market News
Wall Street sours on weak internal data of the plant
Stocks struggled to extend gains last week, down on Monday as disappointing U.S. factory numbers dampened optimism about economic growth in China.
Reducing broke three days of benefits for S & P 500, holding it shy of its 50-day moving average around 1420 level, which was lower than the index from 22 October, and is now serving as the key point of resistance investors.
Manufacturing activity in the U.S. unexpectedly fell in November, the Institute for Supply Management said, dropping to its lowest level in more than three years. Economic data has been mixed in recent months, fanning fears about the pace of growth at a time when investors are already concerned about "financial cliff" The question in Washington.
The number of ISM "was below expectations, which were conservative, and that puts an exclamation point on the concern of many of us have about the impact on the economy of the cliff," said Leo Grohowski, chief investment officer at BNY Mellon Wealth Management in New York.
Markets opened higher as output at factories in China grew in November for the first time in over a year, the data showed. Investors look at the strength of China's second-largest economy in the world to compensate for sluggish growth in the U.S. and Europe.
However, the financial cliff is the focus of investors that political haggling continues over how to deal with large automatic spending cuts and tax increases will hit next year. There are fears that the combination of spending cuts and tax increases may disrupt the U.S. economy back into recession.
While from its high for the year, S & P 500 is still up 12.1 percent in 2012.
"This may be the last opportunity for investors to take profits" after unexpectedly strong year, said Grohowski, which helps control about $ 170 billion in assets.
The materials were the weakest sector on Monday, led lower by Newmont Mining after the company announced that its chief executive had resigned. Newmont shares fell 3 percent to $ 45.69. Component Dow DuPont fell 1.7 percent to $ 42.39. S & P materials index lost 1.8 percent.
Index Dow Jones Industrial Average fell 59.98 points, or 0.46 percent, to 12,965.60 at the close. 500 Index Standard & Poor dropped 6.72 points, or 0.47 percent, to 1,409.46. The Nasdaq Composite Index fell 8.04 points, or 0.27 percent, to end at 3,002.20.
U.S. Treasury Secretary Timothy Geithner said on Sunday pushed the Republicans to propose specific ideas to reduce the deficit. It is predicted that they will agree to raise the tax rates on the rich, to get at the end of the year deal to avoid a financial cliff.
Among other factors that serve to compensate for the ISM report on U.S. factories were two developments in the euro area: Spain officially asked to pay more than $ 50 billion in EU funds to recapitalize its crippled banking sector, while Greece said it will spend 10 billion euros ($ 13 billion) to buy back bonds in an attempt to reduce its ballooning debt.
PHLX Europe sector index gained 0.1 percent.
Dell shares gained 4.4 percent to $ 10.06. The action was one of the biggest percentage increase in S & P 500 and Nasdaq 100 after Goldman Sachs raised the stock to "buy" from "sell.
Advanced Micro Devices was the top winner S & P, the growth of 7.3 per cent to $ 2.36. Options traders seem to bet on further improvement to come. Early version of the stream has been focused on calls up in April, including the sweep in April 3594 $ 3.50 call for a strike 16 cents per contract when the market was 14 cents to 16 cents, said WhatsTrading.com options strategist Frederic Ruffy.
Retail stocks were among the weakest in the day, with JC Penney Co with 3.2 percent at $ 17.36 and Staples Inc with 2.3 percent at $ 11.43. Consumer names tend to lag during periods of economic uncertainty, as consumers focus on the major purchases.
Volume was light, about 5.58 billion shares traded on the New York Stock Exchange, Nasdaq and NYSE MKT, which is well below last year's daily average 7.84 billion.
Outnumbered decliners on the NYSE advanced at a ratio of 3 to 2, while on the Nasdaq, about 14 stocks fell for every 11 that rose. Reuters.com
Currencies
Dollar, euro, yen slip; Aussie steady after RBA cuts
The dollar and the euro slipped against a resurgent yen on Tuesday after U.S. manufacturing activity hit a three-year low in November, while the Australian dollar held its gains after the Reserve Bank of Australia cut interest rates in line with expectations.
Data released on Monday by the Institute for Supply Management (ISM) showed U.S. manufacturing activity unexpectedly declined in November, falling to its lowest level in more than three years.
The report dragged down shares in Asia and undermined the risk appetite of investors.
"The perceived strengthening of the U.S. economy was one factor pushing up the dollar in recent weeks," said Masashi Murata, a senior strategist at Forex Brown Brothers Harriman.
"Ahead of U.S. Nonfarm Payrolls report on Friday, which may indicate that job growth is slowing, the dollar is easy to sell," he said.
Continuing concerns about the U.S. "financial cliff" also added perceived safe haven appeal of the yen.
The White House rejected the proposal congressional Republicans on Monday to prevent $ 600 billion in tax increases and spending cuts, saying it did not meet President Barack Obama's promise to raise taxes on wealthy Americans.
The dollar shed about 0.2 percent to trade at 82.07 yen after earlier falling as low as 82.04 yen, moving further away from 7-1/2 month high of 82.84 yen hit last month.
Election Watch
The yen slid in recent weeks on expectations of pressure on the Bank of Japan for further easing after the December 16 elections, campaigning for which officially began on Tuesday.
Shinzo Abe, the leader of the main opposition Liberal Democratic Party (LDP) is the favorite to be the next Prime Minister of Japan, urged the Bank of Japan to take more decisive action to mitigate. His proposals included setting the inflation target of 2 per cent, starting "unlimited easing", or even cut interest rates to zero or below.
"The yen has weakened due to Abe, but short story ended. Trader to trade every day, the market moves every day, and there is a limit to how long the market can continue to trade in the day-to-day factors," said Kimihiko Tomita, head of foreign exchange state Street Global Markets in Tokyo.
"Abe has opened a lot of issues to discuss, but it remains to be seen how many of them come true," he said.
The growth of the yen against the dollar on Tuesday also helped him against the euro, with some investors locked in gains after the European division rose on Monday on positive news for the region's debt crisis.
Spain formally requested the European funds for the recapitalization of the banking sector, reducing the Spanish and Italian bond yields, as investors became more confident in buying euro zone debt. Greek bonds rallied after the announcement of the details of the debt repayment.
Against the yen, the euro slipped about 0.2 percent to 107.16 yen, after rising to a seven-month high 107.67 yen on Monday.
Last euro to $ 1.3058, steady from late U.S. levels on Monday, when it rose to $ 1.3076, its highest level since Oct. 22.
Australia central bank lowered the key interest cash a quarter-point to a record low of 3.0 percent on Tuesday after its monthly meeting policy. This caused a weakening in May to 125 basis points and the corresponding trough hit in the darkest days of the global financial crisis.
Against the U.S. dollar, the Aussie rose 0.2 percent to $ 1.0428.
Aussie reached a session high of $ 1.0454 after the announcement of the RBA, which market participants said was valued at most positions. But she remains shy of the two-month high of $ 1.0491 hit last week. Reuters.com
