Published December 17, 2012
NEW YORK – Wall Street was set to open higher on Monday as investors were encouraged by signs of movement on "fiscal cliff" negotiations over the weekend.
Republican House Speaker John Boehner edged slightly closer to President Barack Obama's key demands as they try to avert the tax hikes and spending cuts that are set to take effect in the new year.
Sources familiar with the talks confirmed that Boehner proposed extending low tax rates for everyone who has earned less than $1 million, and rates would rise for wages above that. But Boehner's new positions were still far from those held by Obama.
"It does solidify that a deal is very close and it could be announced by the end of this week," said Peter Cardillo, chief market economist at Rockwell Global Capital in New York. "We could be surprised. We could actually have a Santa gift that a deal has been reached."
Uncertainty over when and if a federal budget deal will be done has kept investors cautious in what is already a normally quiet trading period heading into year-end.
Investors are worried the economy could slide back into recession if the full brunt of the tax and spending changes is allowed, though most expect a deal will eventually be reached.
Monday's economic data was less cheery as manufacturing activity in the New York region declined for a fifth month in a row in December.
S&P 500 futures rose 5.8 points and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration of the contract. Dow Jones industrial average futures gained 33 points and Nasdaq 100 futures added 11 points.
If the S&P 500 sustains its gains through the session, the index would snap a two-day losing streak. Despite the uncertainty of fiscal cliff talks, the S&P has performed well in the last month, grinding higher in mostly light volume.
Clearwire Corp agreed to sell the rest of the company to Sprint Nextel Corp for a slightly sweeter $2.2 billion offer, days after minority shareholders criticized the previous bid as too low. Clearwire tumbled 8.6 percent to $3.08, while Sprint was up 1.8 percent at $5.65.
Apple Inc reversed earlier losses in premarket action and was up 0.5 percent at $512.23 even as Citigroup cut its rating to 'neutral' from 'buy' and slashed its price target to $575 from $675.
Apple shares have tumbled nearly 30 percent in about three months, losing 3.8 percent on Friday alone and helping lead the overall market lower.
The tech giant said it sold more than 2 million of its new iPhone 5 smartphones in China during the three days after its launch there on Friday, but the figures did not ease worries about stiffer competition.
American International Group Inc may raise as much as $6.5 billion from the sale of its remaining stake in AIA Group Ltd, exiting a business the U.S. insurer started nearly 100 years ago. AIG was up 1.7 percent at $34.44.
Networking equipment company Cisco Systems Inc has hired Barclays to sell its Linksys home router unit, a report said on Sunday.
(Editing by Kenneth Barry)