Friday Mid-Day Movers: 3 Stories Driving Markets
At 12:50 p.m.: DJIA: -0.11%, S&P 500: -0.24%, NASDAQ: -0.45%.
1) The end of the payroll tax holiday and the possibility of continued political wrangling in Washington over the federal budget have left a mark on consumer sentiment. The benchmark survey, conducted by Thomson Reuters and the University of Michigan, showed that consumer sentiment fell unexpectedly for the second month in a row, hitting a one-year low.
2) As expected, China’s GDP grew at a relatively sluggish pace in 2012. Economists polled by Reuters were looking for 7.8 percent annual growth, and Chinese officials reported 7.9 percent for the year. This is the slowest growth rate since 1999, and projections for 2013 are mixed.
Stable, not rapid, growth is the policy of the country’s new leadership. This could mean a modest target of 7.5 percent annual GDP growth. However, this rate may conceal a high level of economic activity because of massive infrastructure programs that China appears to be lining up for 2013.
3) Congress likes to trade stocks as much as Raj Rajaratnam. Reports in recent years have featured how legislators in Washington, D.C., exempted themselves from insider trading laws that apply to everyone else. One study from Georgia State University even concluded that Congress makes “significant abnormal returns” when it comes to the stock market.
After receiving pressure and media attention, Congress passed the Stop Trading on Congressional Knowledge Act, also known as the STOCK Act. It is supposed to combat insider trading among government employees and members of Congress. However, its full range of restrictions has yet to be implemented, as the bill continues to be delayed. Some question how effective it will be considering all of the loopholes found in other laws. Naturally, the stock picks made by Congress continue to attract interest. If you can’t beat them, join them, right? (Read more.)
Don’t Miss: The Cautious Optimism of Timothy Geithner.