Stocks fell Wednesday giving back a decent portion of the previous day’s gains. A late day selloff accelerated into the close as a fiscal cliff deal – that was seen as nearly a done deal just 24 hours earlier – seemed less so, as the political jousting continued. Speaker Boehner is proposing a vote on his “plan B” which is a different path than what the two sides had been discussing early in the week. All this has nothing to do with economics or earnings but is dominating the day to day action. The S&P 500 dropped 0.76% while the NASDAQ gave back 0.33%. The only economic news of the day to note is a less than expected housing starts number.
The S&P 500 is still above the level it broke out over yesterday but came close to rescinding it on the close. If it does in the future that would be the second rejection in as many weeks.
The NASDAQ – ironically as it has been the poorer performer of late – held its breakout a bit better.
Oil also stood out Wednesday as it had a strong day, and is testing recent highs.
General Motors (GM) was a star on the day as the Treasury Department announced it will exit all of its investment in the company within the next 12-15 months.
Fedex (FDX) reported that earnings fell due to a weakened global outlook and the impact of Superstorm Sandy. Profits were down, but they topped forecasts – so of course the way Wall Street plays the game, bad news = good news.
The other key name of the day was Herbalife (HLF) which plunged 12% after hedge fund investor Bill Ackman revealed a short position in the name.
Activist investor William Ackman confirmed on Wednesday that he is betting against the stock of Herbalife Ltd in a move that sent shares of the weight management product company reeling and sparked a caustic rebuke from its chief executive officer. Ackman, who oversees $11 billion in assets at Pershing Square Capital Management, told Reuters that he was shorting Herbalife when asked about the matter.