MarketView for November 16

Summary

A glimmer of hope that the issue of the fiscal cliff might be resolved in some manner sent the major equity indexes higher on Friday, though the gains were not enough to offset the week's losses. Share prices recovered from early declines after leaders of the Senate and House emerged from a meeting at the White House and indicated they would be flexible in efforts to settle fiscal policy differences.

Democrats said they recognized the need to curb spending and Republicans said they had agreed to put "revenue on the table" following a meeting with President Barack Obama.

About $600 billion of automatic budget cuts and tax increases will start to take effect in the New Year unless Washington reaches a deal. With memories of 2011's debt ceiling impasse fresh in investors' minds, many are worried this year's discussions could be drawn out or yield no agreement.

For the week, the S&P was down 1.5 percent, its second week in a row of losses. The Dow lost 1.8 percent, down for the fourth straight week, while the Nasdaq was lower for the sixth week, also losing 1.8 percent.

If all the changes go into effect, economists say it could tip the economy into recession. Investors have pulled out of stocks over the past two weeks, taking nearly 4 percent off the S&P 500.

Shares of Penn National Gaming ended the day up 28.2 percent to close at $48.23 on its busiest day of trading in more than four years, after the owner of gaming and pari-mutuel properties said late Thursday it will split its business into a gaming-focused real estate investment trust and a gaming operator.

Dell helped limit the Nasdaq's gains after falling PC sales hurt earnings. Dell ended the day down 7.3 percent to close at $8.86.

Sears Holdings reported a quarterly loss that was narrower than expected, but same-store sales fell on weak demand for electronics, sending shares down 18.8 percent to $47.49.

More violence in the Middle East also kept investors wary after Palestinian militants nearly hit Jerusalem with a rocket for the first time in decades and fired at Tel Aviv for a second day.

Approximately 7.52 billion shares changed hands on the three major equity exchanges, a number that was well above the year-to-date average daily closing volume of about 6.52 billion shares. Volume is expected to be light next week with some investors away for the Thanksgiving holiday, and the market closed on Thursday and open for only a half-day on Friday. The decreased liquidity could spell more intra-day volatility for the market, though fewer market participants could also mute action.