A joint press conference that concluded just before noon, featuring Representatives John Boehner, Harry Reid, Nancy Pelosi and Mitch McConnell, offered hope that a fiscal cliff compromise might be accomplished. The conference was certainly geared toward appeasing populace and market concerns regarding Congressional intent in reaching a mutually acceptable agreement. Thus, stocks should be supported by the news, at least heading into the close of trading Friday and possibly through next week, barring other catalysts.
More than a hint of compromise was in the wind as the group congenially addressed the nation. House Speaker Boehner said that some revenues were on the table. House Minority Leader Nancy Pelosi said that some spending cuts were available. Democratic Party Senate Leader Harry Reid said the cornerstones of a deal were in place, and that they intended to close a deal rather than simply pass the buck forward. He added that the deal was a high priority focus, and that representatives were not going to wait until the last day of December, which we were concerned about. He also noted that they might even work through a portion of the Thanksgiving Day recess, reflecting how important resolving the issue is to them. Finally, Senate Minority Leader McConnell concurred with the statements and closed, giving the public a sense of calm about the issue not previously existent.
Stocks, which had been down after heading into the press conference with low expectations, immediately broke above break-even ground. The SPDR S&P 500 (NYSEARCA:SPY), which was down 5.1% from the election through Thursday November 15, was approaching a half point gain at noon, as was the SPDR Dow Jones Industrial Average (NYSEARCA:DIA) and the PowerShares QQQ (NASDAQ:QQQ). Oil is benefiting from the news as well, with the United States Oil (NYSEARCA:USO) security driving up over 1.3% at the hour of scribbling here. Even gold is benefiting from the clarity, as pressure lessens from its sellers using capital to buy stocks viewed as too cheap. The SPDR Gold Shares (NYSEARCA:GLD) has broken above break-even ground. I offer kudos to the congressional leaders for this expression, because if it is executed upon, it offers support to shares. It at least reverses the near-term downtrend, and so I advise investors to raise risk and remove hedges at least through next week, barring other factors.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.