At midday: S&P 500 struggles after rally

Share

North American stocks were mixed in midday trading on Wednesday after what looked like a setback in U.S. negotiations over the country's budget, along with a slide in housing starts.

Shortly after noon, the S&P 500 was down 3 points or 0.2 per cent, to 1443. The blue-chip Dow Jones industrial average was down 15 points or 0.1 per cent, to 13,336. In Canada, the S&P/TSX composite index was up 71 points or 0.6 per cent, to 12,405.

Stocks had been rallying in recent sessions on signs that Republicans and Democrats were making progress in budget negotiations – crucial talks for heading off automatic tax increases and spending cuts in the new year. However, the White House on Thursday rejected the Rebublican offer to allow tax increases on Americans earnings more than $1-million (U.S.) a year. The White House wants a threshold of $400,000.

Meanwhile, housing starts fell 3 per cent in November over last month, although building permits rose a surprising 3.6 per cent.

Within the S&P 500, defensive stocks were the biggest laggards: Health-care stocks fell 0.6 per cent, while utilities and telecom stocks fell 0.5 per cent each. Economically sensitive technology stocks and consumer discretionary stocks were almost unchanged.

General Motors Co. rose 8.2 per cent after it said it would buy 200 million shares from the U.S. Treasury at $27.50 each – a significant premium over Tuesday's closing price. The Treasury said it would sell its remaining 300 million shares on the open market, starting in January.

Within Canada's benchmark index, financials rose 1 per cent, energy stocks rose 0.6 per cent and materials rose 0.3 per cent.

Commodities were driven higher by the World Bank's prediction that China's slowdown has bottomed out and economic growth will pick up into next year.

Crude oil rose to $89.50 a barrel, up $1.57. Gold rose to $1,673 an ounce, up $1.90.

In Europe, the U.K.'s FTSE 100 rose 0.4 per cent and Germany's DAX index rose 0.2 per cent.