US markets slip on fiscal cliff budget deadlock

The US markets slipped on Tuesday, for the second day in a row as Senate Majority Leader Harry Reid stated that budget talks in Washington have made little progress even as the White House insisted that talks about averting tax hikes and spending cuts are on track. Senate Democratic Leader Harry Reid stated there was little progress made on reaching a year-end deal to avert the cliff and added that it would be foolish to hatch a fiscal-cliff deal that won't raise the US debt ceiling. Senate Republican Leader Mitch McConnell, meanwhile, urged President Barack Obama to turn off the campaign, and come to Congress with a fiscal-cliff fix. The concern about the budget deadlock overshadowed economic data showing demand for US capital goods increased, home prices rose by the most since 2010 and consumer confidence reached a more-than four-year high. US consumer confidence rose in November to the highest level since February 2008. The Conference Board’s confidence index climbed to 73.7, the highest since February 2008, from a revised 73.1 reading the prior month.

In other economic reports, home prices rose in the year ended in September by the most since July 2010, showing the recovery in the US real estate market. The S&P/Case-Shiller index of values in 20 cities climbed 3 percent from September 2011, after advancing 2 percent in the year to August. Separately, bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, rose 1.7 percent last month, the most since May, the Commerce Department stated.

In Europe, the euro zone ministers, the International Monetary Fund and the officials of European Central Bank agreed on a package of incentives and conditions after 12 hours of meeting. The ministers agreed to cut Greek debt by 43.7 billion euros based on the estimate of government debt to drop to 124% of gross domestic product by 2020. Greece will receive the 43.7 billion of funds in four installments after it meets the conditions laid out by lenders. The new austerity steps demanded by international lenders require Greek debt to fall below 110% of GDP by 2022. Eurogroup Chairman Jean-Claude Juncker stated that ministers would grant a formal approval of loans on December 13 after lawmakers in Germany, Finland and Holland approve the package. Separately, investors focused on the revised economic outlook for the euro zone and 34 member nations. The Organization for Economic Cooperation and Development cut its estimate across all member nations to 1.4% in 2013 from its previous estimate of 2.2% forecast only six months ago. The OECD report estimated a mild contraction in GDP of 0.1% in 2013 and resumption of growth of 1.3% in 2014 in the euro zone.

The Dow Jones Industrial Average lost 89.24 points, or 0.69 percent, to close at 12,878.10, the S&P 500 finished down by 7.35 points, or 0.52 percent at 1,398.94, while the Nasdaq ended lower by 8.99 points, or 0.30 percent to settle at 2,967.79.

Indian ADRs closed mixed on Tuesday, HDFC Bank was down by 0.44%, Infosys was down 0.26% and Tata Motors was down 0.04%. On the other hand, Dr. Reddy’s Lab was up 0.69% and ICICI Bank was up 0.39%.