Stock Market Today: GDP Revised Higher, but Data Still Ugly
The stock market today opened higher as third-quarter U.S. gross domestic product (GDP) was revised from its original 2.0% reading to 2.7%. The market boost could reverse depending on what happens after key political figures meet in Washington today to discuss the fiscal cliff. Here's a closer look: GDP lifted for all the wrong reasons - Today the U.S. Commerce Department reported its second estimate for third-quarter GDP, and at first glance the 2.7% revision seems to indicate growth after the second quarter's dismal 1.3% level. Yet, today's number missed estimates which called for 2.8% growth, and was driven largely by government spending which accounted for 0.67 percentage points of the reading and inventories which contributed 0.77 percentage points. This was the first positive reading for government spending in over two years and the increased inventories suggest businesses could limit production in the fourth-quarter, especially with the looming fiscal cliff . To continue reading, please click here...
The stock market today opened higher as third-quarter U.S. gross domestic product (GDP) was revised from its original 2.0% reading to 2.7%. The market boost could reverse depending on what happens after key political figures meet in Washington today to discuss the fiscal cliff.

Here's a closer look:

  • GDP lifted for all the wrong reasons- Today the U.S. Commerce Department reported its second estimate for third-quarter GDP, and at first glance the 2.7% revision seems to indicate growth after the second quarter's dismal 1.3% level.
Yet, today's number missed estimates which called for 2.8% growth, and was driven largely by government spending which accounted for 0.67 percentage points of the reading and inventories which contributed 0.77 percentage points. This was the first positive reading for government spending in over two years and the increased inventories suggest businesses could limit production in the fourth-quarter, especially with the looming fiscal cliff.

Further analysis of today's reading shows that household purchases grew at a 1.4% rate, the lowest in more than a year, and personal consumption, which is supposed to reflect 70% of the U.S. economy, only made up 36% of the 2.7% headline number.

"We're just muddling through," Brian Jones, a senior U.S. economist at Societe Generale in New York told Bloomberg News. "The mix between final demand and inventories was far less favorable. The consumer spending numbers are a reflection of the fact that job growth remains sluggish."

  • Fiscal cliff discussions heat up today- Today marks the largest effort from the Obama administration and congressional leaders to make progress on a deficit reduction deal, as several key members meet in Washington. A day after the president met with more than a dozen CEOs of major corporations he is scheduled to have a private lunch with Mitt Romney to discuss details of a compromise. U.S. Treasury Secretary Timothy Geithner will also be meeting with each of the four congressional leaders.
Geithner, who will be accompanied by the president's congressional liaison Rob Nabors, will hold individual sessions starting with Senate Majority Leader Harry Reid, D-NV, and then House Speaker John Boehner, R-OH, in the morning, followed by meetings with House Minority Leader Nancy Pelosi, D-CA, and Senate Minority Leader Mitch McConnell, R-KY, in the afternoon. Boehner will be accompanied in his meeting by David Camp, R-MI, Chairman of the House Committee on Ways and Means, and Paul Ryan, R-WI, Chairman of the House Budget Committee.

The markets have welcomed any positive remarks that have surfaced regarding the fiscal cliff and many are hopeful a deal can be reached. But so far all we've heard from recent discussions are generic, meaningless statements, and today will be a key indication if any actual progress is being made.

Editors Note: While Washington duels over fiscal cliff, you can get your money prepared for any outcome with these steps.

Prior to the outcomes of these key meetings here are today's biggest market movers:

  • Acura Pharmaceuticals (Nasdaq: ACUR) is up over 51% in early trading after the specialty pharmaceutical company recently announced its immediate-release next generation pseudoephedrine tablet, NEXAFED, is bioequivalent to the leading national product for nasal congestion.
  • China Hgs Real Estate Inc. (Nasdaq: HGSH) is also up close to 50% in early trading and HGSH stock has soared from under $0.50 at the end of October to its current price of $4.25. Yet this stock should be avoided, as the recent surge appears to be unfounded and based on hype alone.
  • Liquidity Services Inc. (Nasdaq: LQDT) is one of today's biggest losers, down close to 20%, after the online auction operator issued much lower guidance than expected for its fiscal 2013 first quarter.
The markets started to head south after Boehner came out of his meeting and said "there has been no substantive progress in talks and there is a real danger of going off the fiscal cliff."

As of noon the Dow Jones was up 3 points, or 0.02%, and the S&P 500 was up 2.05 points, or 0.15%.

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