Market Review By TraderXP:
Apple Inc (AAPL) fell 8.9 percent, the most since 2010, on concern that the company will lose ground in smartphones Nokia Oyj in China and give up the market share of Google Inc in the tablets.
Market News
Wall St week ahead: "Cliff" care can manage sales tax
Investors tend to sell stocks to cuttheir losses at year end. But concern about the "financial cliff" - and the possibility of higher taxes in 2013 - can act as a great incentive to sell as winners and losers December 31.
$ 600 billion in automatic tax increases and spending cuts planned for early next year include higher rates for capital gains, which makes the sales tax more attractive than usual.
Tax-related selling could be a weak trend in the stock market leader Apple, analysts said. Shares fell 20 percent in the quarter, but still account for nearly 32 percent for the year.
Apple, declined 8.9 percent last week alone. For stocks that gained more than 25 percent a year for four consecutive years, embedded capital gains suddenly like a sales opportunity, if your tax bill is going to jump dramatically because changes in the calendar.
"Tax loss selling is always a factor (a) a tax on the sales growth was a factor in this year," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.
"You have a lot of wealthy individuals in taxable accounts, and it may be that that affect stocks like Apple. If you look at the stocks that people have their biggest successes, they seem a little more pressure here than usual. "
Of the top 20 performers this year in the S & P 1500 index, which includes large, mid and small capitalization, all butfour lost ground in the past five trading sessions.
Peak to avoid high taxes on income portfolio may lead to additional weakness.
S & P 500 ended the week higher by 0.1 percent, after a week of trade mainly due to financial news talks rock, which pushed the market in both directions.
Painkiller from the Fed?
Fed meeting this week may offer some relief, if policymakers announce further plans to help the lackluster U.S. economy. The Federal Open Market Committee will meet on Tuesday and Wednesday. The policy statement is expected at about 12:30 pm EST on Wednesday after the meeting - the last year for the Fed.
Friday jobs report showing non-farm payrolls added 146,000 jobs in November eased concerns that the superstorm Sandy got the job market is difficult.
"After the Fed meeting, I think it would be downhill from there, as worries about the financial cliff really take center stage and prospects of the transaction are becoming less and less likely," said Mohannad Aama, Managing Director, Beam Capital Management LLC in New York .
"I think we are likely to see an escalation of the profit before tax rates are going in the next year," he said.
More volume and volatility
The volume may increase as investors try to shift position to the end of the year, some analysts say.
Although the majority of which would be in the action, some of the additional trading volume may spread to the options, said JJ Kinahan, chief derivatives strategist at TD Ameritrade's website.
Volatility can take, as well as some who have seen on sale Apple.
"In fact, the volatility in the Apple, was very high, and the market was quiet. I expect volatility Apple, moved to market volatility," said Taner Enis, global macro editor in RiskReversal.com, options trading firm in New York.
Shares of Apple, the largest U.S. company by market value, on Friday registered their worst week since May 2010. In another bearish sign, the 50-day moving average shares fell to $ 599.52 - below its 200-day moving average at $ 601.38.
"There's a lot of tax-related selling is happening and it will happen. Apple is an example, even (though), there are other factors associated with Apple," Aama said.
If tax rates rise, investorwould sell now to book profits and pay lower taxes on capital gains, according to the Aam. But if an investor has capital losses, then "you take the loss and they counted the capital gains or regular income if you do not have any offsetting capital gains.
"In fact, higher rates of capital gains tax will yield more significant losses in the next year than this year, as the tax shield will cost more in 2013. So, if you have no capital gains this year You should refrain from selling your losers in 2012 and wait until 2013, "he said in an e-mail.
While investors will sell the stock to avoid high taxes in 2013, the company may continue to declare special dividends and accelerated the end of the year. Among the latter, Expedia announced a special dividend of 52 cents per share will be paid on December 28.
To be sure, the big sell-off in stocksfollowing November 6 election, most likely due to the sales tax, which makes it difficult to judge how many more to come.
Even the recent inventory reduction, thethree major U.S. stock indexes are still in a year. Index Dow Jones Industrial Average is up 7.7 percent in 2012 so far, while 500 index benchmark Standard & Poor amounts to 12.8 percent and the Nasdaq CompositeIndex is up 14.3 percent for the year to date.
Bruce Zaro, chief technical strategist at Delta Global Management Assets in Boston, said there is a good chance that the market can rally before the end of this year.
"Even with little or spotty news that could be put in the bucket relative to the positive (rock) talks, the market basically hung out there, and I think he was hanging there in anticipation of something coming," he said. Reuters.com
Currencies
Euro embrace two-week low as Italy suffered a political storm
The euro flirted with a two-week low against the dollar on Monday after Italian Prime Minister Mario Monti offered to resign, rising political uncertainty, which will lead to euro zone'sthird largest economy.
The single currency was also undermined the prospects of a recession in Germany, and expectations of future rate cuts by the European Central Bank.
"If the pro-euro position Monty to back, that should cause concern about the euro," said Junya Tanase, chief currency strategist at JPMorgan Chase in Tokyo.
The euro fell as much as 0.3 percent to around $ 1.2880 two-week trough near $ 1.2876 set on Friday. This is the last of $ 1.2908, which is about 0.2 percent of the U.S. level of late, with the focus on the Italian bond market reaction to the news.
Against the British pound, the euro also hit a three-week low of 79.865 pence.
Monty's surprise announcement at the weekend came a few days after former Prime Minister Silvio Berlusconi abruptly withdrew support from the government technocrat Monti formed more than a year ago in an effort to restore confidence in Italy with investors.
Elections are expected to be pushed back to February, where, at the moment, pro-European center left of the Democratic Party is seen as having a strong advantage over anti-Monty front of Berlusconi and the new anti-establishment party, which is in second place in the poll.
The euro also came under pressure after the central bank of Germany on Friday warned the euro zone's biggest economy could soon enter a recession.
Comments from the European Central Bank's policy on Friday that the interest rate cut was possible in the next year if the economy does not pick up the euro zone also weighed on the single currency.
Gloomy view contrasts with the strong performance of the U.S. data released on Friday showed that U.S. firms hiring rose to 146,000 in November from 138,000 in October, contrary to the predictions of the superstorm hit Sandy.
The unemployment rate also fell to nearly four-year low of 7.7 percent.
U.S. dollar index rose 0.2 percent to 80.45, nearly two-week high of 80.658 hit immediately after the release of payroll data on Friday.
However, the sharp drop in U.S. consumer confidence took some shine off the dollar and dollar growth is also limited ahead of this week's Federal Reserve policy meeting.
Many economists believe the Fed will announce Wednesday monthly purchases of bonds in the amount of $ 45 billion, signaling it will continue to pump money into the U.S. economy during 2013 in a bid to reduce unemployment.
"Despite the decline in the unemployment rate, we expect the Fed to convert the program expires Operation Twist in direct purchase program, with the purchase of distribution similar to thecurrent program," analysts at Barclays Capital wrote in a note.
Also does not help the dollar, there are few signs that Washington politicians are closer to prevent automatic tax increases and spending cuts set to take hold in the next year, which analysts warn could see fluctuations of the U.S. economy back into recession.
U.S. President Barack Obama met with Republican House Speaker John Boehner on Sunday to discuss ways to avoid "financial cliff", but the resolution remained unclear.
Against the yen, the dollar was steady at 82.48 yen, but its failure to break above last Friday of the month high 82.84 yen after strong data work suggests, the U.S. currency is exposed to fall in the near future, some analysts say.
"The dollar is not raised, despite the increase in U.S. bond yields. Yen short positions already at a high level, the dollar could fall very quickly," said Tanase JPMorgan.
U.S. data showed control speculators net short yen positions rose to the highest level since mid-2007.
The Canadian dollar hit a seven-week high against the U.S. dollar, which fell to the lowest C $ 0,9865, and the Canadian Division extended its gains after strong Canadian data and approval of the government's energy company Nexen accession of Chinese oil giant CNOOC. Reuters.com
