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U.S. stocks fell on Wednesday after recent optimism over negotiations on the country's budget appeared to fade.
The S&P 500 closed at 1435.81, down 10.98 points or 0.8 per cent – interrupting a 33-point rally over the past two days, which had driven the benchmark index to a two-month high. The blue-chip Dow Jones industrial average closed at 13,251.97, down 98.99 points or 0.7 per cent. In Canada, the S&P/TSX composite index closed at 12,403.63, up 69.29 points or 0.6 per cent.
Stocks had been rising 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 Republican 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.
The World Bank said that China's economic slowdown has bottomed out and economic growth will pick up into next year – providing a bullish reason to embrace commodities. Crude oil rose to $89.51 (U.S.) a barrel, up $1.58.
General Motors Co. rose 6.6 per cent, to $27.18 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.
FedEx Corp. rose 0.9 per cent after reporting a 12 per cent dip in its quarterly earnings, but a better-than-expected gain in revenue.
David Berman