MENAFN - ProactiveInvestors - Australia
Why the Dow Jones losses accelerated in afternoon trade
U.S. markets were lower Wednesday after the White House rejected the Republican budget proposal, dubbed "Plan B", to avert the fiscal cliff, as the deadline fast approaches. The fall in stocks gained pace after the Republican budget plan was rejected. The ASX will look to open softer - with the SPI current a few points weaker.
(MENAFN - ProactiveInvestors - Australia) U.S. stocks were lower overnight, with the fall gaining pace after the Republican budget plan was rejected.
By the close the Dow Jones had lost 99 points to 13,252, while the NASDAQ fell ten points to 3044.
White House communications director Dan Pfeiffer said in a statement that President Barack Obama would veto the plan offered by House Speaker John Boehner, which includes raising taxes on incomes of 1 million or above.
Boehner originally wanted tax increases on no one, but the threshold is still much higher than President Obama's 400,000 threshold, which was already a concession.
"The proposal from the Ohio Republican would give millionaires a tax break of 50,000, while eliminating tax cuts that 25 million students and families struggling to make ends meet depend on," Pfeiffer said.
A vote is expected on Thursday.
On the economic front, the only data point was housing starts for November. Housing starts last month fell to 861,000 from a downwardly revised 888,000 in October. Analysts expected less of a drop, to 865,000, largely due to the impact from Hurricane Sandy.
Building permits, meanwhile, rose 3.6% in November to 899,000.
In corporate news, Knight Capital Group (NYSE:KCG) shares rose as it agreed to be bought by rival electronics trading firm GETCO in a 1.4 billion cash-and-stock deal, with the two companies to be merged under a new publicly traded holding company.
Shares of General Motors (NYSE:GM) were up over 6% after the auto maker said it would buy 200 million shares of its stock from the U.S. Treasury, part of the government's plan to sell all of its stake in the company in the next 12 to 15 months.
Meanwhile, according to a Bloomberg report, healthcare company Pfizer (NYSE:PFE) will cut about a fifth of its 3,000-member sales force for primary care pharmaceuticals as part of a continued cost-cutting strategy after losing its patent on its cholesterol drug, Lipitor. Shares in the company were down 0.9% late Wednesday.
On the earnings front, economic bellwether FedEx (NYSE:FDX) stood by its full-year earnings outlook, while Hurricane Sandy hurt profits in the second quarter. FedEx also said it expects to show a third-quarter profit of 1.25 to 1.45 a share, down from a year ago and compared to a 1.45 estimate, but affirmed its full-year adjusted earnings target of 6.20 to 6.60 a share.
General Mills (NYSE:GIS) raised its profit outlook for the year, and quarterly profit came to 541.6 million, or 82 cents a share, up from 444.8 million, or 67 cents, earned in the same period during fiscal 2012. Sales improved to 4.88 billion from the prior year's 4.62 billion.
Navistar International Corp. (NYSE:NAV) swung to a wider-than-expected fiscal fourth-quarter loss due to several large charges, while sales declined. The vehicle and engine manufacturer recently agreed to name to its board three directors nominated by activist investor Carl Icahn.
Late Tuesday, Oracle (NASDAQ:ORCL) posted better-than-expected results for its second fiscal quarter, and issued an upbeat forecast for its hardware business next quarter, sending shares higher on Wednesday.
In bio tech news, shares in Oncothyreon (NASDAQ:ONTY) plummeted over 54% Wednesday after the company said that a phase 3 trial of its lung cancer drug did not meet the main goal of improving overall survival in patients.
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