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U.S. stock-index futures pointed slightly higher as traders paid close attention to events surrounding the fiscal cliff in Washington and unfolding unrest in the Middle East.
As of 8:20 a.m. ET, Dow Jones Industrial Average futures rose 12 points to 12533, S&P 500 futures gained 3.3 points to 1355 and Nasdaq 100 futures climbed 7 points to 2529.
It's been another tough week for Wall Street. The Dow and Nasdaq are trading at June lows, while the S&P 500 is at its lowest level since July.
The fiscal cliff -- a mixture of painful spending cuts and tax hikes -- that is set to go into effect at the beginning of next year has been a major cause of concern. The cliff is a vestige of the last debt debate in Congress, where lawmakers failed repeatedly to come to a so-called "grand bargain" to set the country on a more sustainable path. Now that elections have broadly reaffirmed the status quo in Washington, there is concern that politicians could fail to reach a deal.
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"Initial positions in the fiscal cliff negotiations between President Obama and the Congressional Republicans suggest that the likelihood of hitting the cliff, at least temporarily, is non-trivial," analysts at Barclays wrote in a note to clients.
If the U.S. falls off the cliff, it is likely to badly damage the already struggling economy. Plus, it could put the American debt rating in jeopardy. Moody's Investors Service and Fitch Ratings still retain top-notch ratings on the U.S., but have threatened to chop it down if an agreement isn't reached. Standard & Poor's, the only major credit ratings firm to have the U.S. at less than a 'AAA' also has a negative outlook.
The White House and Congress are expected to begin talks on the day about avoiding the fiscal cliff. The Wall Street Journal also reported that the Obama Administration is developing a plan that will push back the fiscal cliff and instead focus on a series of smaller spending cuts and tax increases. Such a plan would likely need congressional support.
Market participants also said they were watching the unfolding turmoil in the Middle East. Israel has been performing strikes on targets in Palestine, while groups in that country continue lobbing rockets back into Israel. According to news reports, a rocket was fired at Tel Aviv, Israel's business capital. That rocket missed, but highlights the rising tensions and chance of an armed conflict in the already volatile region.
In commodities, the benchmark crude oil contract climbed 81 cents, or 0.95%, to $86.29 a barrel. Wholesale New York Harbor gasoline rose 0.66% to $2.714 a gallon. Gold fell $2.10, or 0.12%, to $1,712 a troy ounce.
On the macro front, traders will get a report at 9:15 a.m. ET on U.S. factory output for the month of October. Hurricane Sandy has had a dramatic impact on such reports for October and November, making them more difficult for economists to interpret.
The Euro Stoxx 50 fell 0.39% to 2452, the English FTSE 100 dipped 0.69% to 5638 and the German DAX slumped 0.51% to 7008.
In Asia, the Japanese Nikkei 225 soared 2.2% to 9024 and the Chinese Hang Seng edged up 0.24% to 21159.