U.S. stocks fell sharply last night after a two-session rally as negotiations to avoid deep spending cuts and tax hikes seemed to hit an especially rocky spot.

President Barack Obama told a news conference that Republicans find it “very hard” to say yes to him, while a spokesman for House Speaker John

Boehner, the top Republican in Congress, called the White House “irrational.”

Naturally it looks as if  tension between the two sides is going to rise, and we’re probably going to have some of those uncomfortable silences from both parties. This will raise anxiety in the markets.

 

General Motors Co. jumped 6.6% after the auto maker said it would buy 200 million shares of its stock from the U.S. Treasury, part of the government’s plan to sell all of its stake in the firm.

Oracle Corp. climbed 3.7% a day after the software company reported profit and sales that surpassed Wall Street’s expectations.

The S&P 500 index closed on its day’s lows with volumes up 7.4% vs. the 100 day average. Decliners outpaced advancers on the New York Stock Exchange, where nearly 751 million shares traded. Composite volume exceeded 3.8 billion.

 

The MSCI Asia Pacific Index fell 0.1 per cent from a 16-month high. The Nikkei 225 Stock Average lost 1.2 per cent. The BOJ expanded its asset-purchase fund and said it would reconsider its 1 per cent inflation goal at its next meeting after incoming Prime Minister Shinzo Abe called for a doubling of the target.                                                                                 More than five stocks fell for every four that rose in MSCI’s Asian gauge, which has advanced 14 per cent this year. Nissan Motor Co. plunged 7.4 per cent in Tokyo after Nomura Holdings Inc. cut its stock recommendation. Capcom Co.  which makes video games, sank 12 per cent after cutting its profit forecast.

The Stoxx 600 is heading for a fifth straight week of gains and has rallied 15 per cent this year as the European Central Bank announced an unlimited bond-buying plan and the Federal Reserve began a third round of asset purchases                                                                                                                                                                                                                             However European stock futures declined this morning, indicating the Stoxx Europe 600 Index will retreat from a 19- month high, amid concern U.S. talks to halt automatic budget cuts and taxes may stall. U.S. futures also fell.

European Union Competition Commissioner Joaquin Almunia holds press conference in Brussels around 12:15pm to announce decisions on state aid for Spanish banks Banco Mare Nostrum, Caja3, Ceiss, y Liberbank

NYSE Euronext is in talks to sell itself to rival IntercontinentalExchange Inc. for about $8bn, in a deal that would end more than two centuries of independence for the New York Stock Exchange.

 

AstraZeneca and Johnson & Johnson may both be set to make a bid for Vivus, in the US. Any bid may have to come in above  $30 a share. Others,

including Merck, Pfizer, and Shire, may also be mulling a bid for Vivus. (Independent, Daily Mail)

 

 Sanofi reached a settlement to pay $109mn over allegations that its US units gave doctors free doses of a medicine to win their business and subvert 
 Medicare’s drug reimbursement system. Sanofi sales representatives entered into “illegal sampling arrangements” with physicians. (Bloomberg)

 

David Brockman | Sales and Trading