Stocks Push Higher Despite Spending Cuts - KiiiTV.com South Texas, Corpus Christi, Coastal Bend

Stocks Push Higher Despite Spending Cuts

Posted: Updated:

(CNN) - U.S. stocks drifted higher late Monday as investors took federal spending cuts in the United States in stride.

After languishing in the morning, the Dow Jones industrial average, S&P 500 and the Nasdaq were all up about 0.3% in afternoon trading.

Investors have been bracing for the $85 billion in across-the-board spending cuts for weeks, as budget talks in Washington broke down.

Some analysts fear that the effects of the so-called sequester could take a big bite out of economic growth later this year. But others say lawmakers will eventually replace the cuts with a more targeted approach, and that the impact on the economy will be minimal.

"The sequester is simply not a game-changing event for the economy, despite dramatic prognostications to the contrary," said Mary-Beth Fisher, a fixed-income analyst at Societe Generale, in a report.

Comments from Federal Reserve officials, including chairman Ben Bernanke, also seemed to support the market.

Fed vice chair Janet Yellen said Monday she hopes that low interest rates will succeed in promoting a "return to prudent risk-taking." The comments echoed a speech Bernanke made late Friday and furthered hopes the central bank will maintain its stimulus policies even as the economy improves.

Stocks had come under pressure earlier Monday as investors focused on threats to the global economy.

Chinese stocks tumbled Monday, as the government in Beijing announced new measures to avert a real estate bubble. The Shanghai Composite lost 3.7%, while Hong Kong's Hang Seng declined 1.5%. Japan's Nikkei added 0.4% though.

"There's a lot of hope that China will be able to revive growth," said Carmine Grigoli, chief investment strategist at Mizuho Securities. "So anything disappointing that comes out of that region will definitely be looked at."

In the United States, shares of companies that are exposed to China were among the worst performers. Caterpillar, Alcoa and United Technologies were all down.

European stock markets ended mixed. Italy has been a concern, after elections last month left the euro area's third biggest economy without clear leadership. Also, the European Central Bank will be releasing its Governing Council's monetary policy decisions on Thursday.

Investors will get some readings on America's economy as well later this week, with reports due from the government on productivity and the job market. The monthly report on payrolls and the unemployment rate comes out on Friday.

"U.S. payrolls and central banks take center-stage this week, and alongside the latest developments in Italy this will probably dictate whether we continue the upward march toward the recent highs or whether we pull back to the levels seen during last week's wobble," wrote Jim Reid, analyst with Deutsche Bank in London, in a research note.

The dollar was up against the euro on growing talk that the European Central Bank may signal a rate cut as early as this week after a recent string of poor eurozone economic data and political instability in Italy that could rekindle the region's sovereign debt crisis.

Oil prices sank 1% to below $90 a barrel, while gold prices were down slightly. The yield on the 10-year Treasury note rose to 1.87% from 1.85% on Friday.

There was little in the way of corporate news Monday. But shares of Apple continued to slide, hitting another 52-week low. The stock is now down 20% so far this year. Meanwhile, Apple rival Google rose about 1% and hit a new all-time high in the process.

  • 3 African-Americans on 12-person grand jury weighing Ferguson shooting case

    3 African-Americans on 12-person grand jury weighing Ferguson shooting case

    Saturday, August 23 2014 1:13 PM EDT2014-08-23 17:13:19 GMT
    FERGUSON, Missouri (CNN) -- Ever since it happened, race has been front-and-center in the vigorous debate over the fatal shooting of African-American teenager Michael Brown by a white police officer.Could it also factor into those 12 people now deciding whether that Ferguson, Missouri, officer will face charges in the 18-year-old's death?We may never know. That's because the St. Louis County grand jury weighing the case meets, per established rules, in private.Still, at least we found out Fri...More >>
    FERGUSON, Missouri (CNN) -- Ever since it happened, race has been front-and-center in the vigorous debate over the fatal shooting of African-American teenager Michael Brown by a white police officer.Could it also factor into those 12 people now deciding whether that Ferguson, Missouri, officer will face charges in the 18-year-old's death?We may never know. That's because the St. Louis County grand jury weighing the case meets, per established rules, in private.Still, at least we found out Fri...More >>
  • Shooting Suspect Leads CCPD Officers On Chase Toward Border

    Shooting Suspect Leads CCPD Officers On Chase Toward Border

    Two people were shot on Friday night and the suspect then lead police on a high speed car chase that ended down by the Sarita Border Patrol checkpoint. But the search for the shooter is far from over.More >>
    Two people were shot on Friday night and the suspect then lead police on a high speed car chase that ended down by the Sarita Border Patrol checkpoint. But the search for the shooter is far from over.More >>
  • Corpus Christi 7 Day Film Project Screening

    Corpus Christi 7 Day Film Project Screening

    Production has wrapped and the films are in the can and ready to be screened! Saturday morning, 7 Day Film Project organizer Omar Becerra joined 3 News Anchor Michael Gibson to talk about those local movies. 36 entries still left in the running for a number of awards up for grabs.More >>
    Production has wrapped and the films are in the can and ready to be screened! Saturday morning, 7 Day Film Project organizer Omar Becerra joined 3 News Anchor Michael Gibson to talk about those local movies. 36 entries still left in the running for a number of awards up for grabs.More >>