Dec 30 (Reuters) - Equity futures were slightly higher at
the beginning of electronic trading on Sunday night as talks
continued in Washington over resolving the "fiscal cliff."
However, stocks still could end up falling on Monday when
the cash markets open if lawmakers are unable to come to an
agreement to avoid a series of $600 billion in tax hikes and
spending cuts that are expected to hurt economic growth.
"Hard to predict how or when there will be a deal, but I
believe investors will show their displeasure tomorrow by
selling stocks if there is no deal," said Mohannad Aama,
managing director at Beam Capital Management, an investment
advisory firm in New York.
S&P 500 futures were up 5.5 points, or 0.4 percent, to
1,389.50 in electronic trading. Stocks fell sharply on Friday,
with significant losses in the last minutes of trading, as
prospects for a deal worsened at the beginning of the weekend.
The rise in the futures market does not necessarily augur
for a rally on Monday, however. The cash market and futures
markets closed with a wide gulf on Friday, by virtue of the
extra 15 minutes of trading in futures, when investors sold
The S&P 500 closed at 1,402.43 at 4 p.m. EST on Friday, down
1.1 percent, but futures continued to fall before closing 15
minutes later with a loss of 1.9 percent. S&P futures and the
S&P cash index don't match point by point, but that kind of
disparity is uncommon, and it points to a weak opening in stocks
One hour before they had hoped to present a plan, Democratic
and Republican Senate leaders said they were still unable to
reach a compromise that would stop the automatic tax hikes and
spending cuts that could push the U.S. economy back into
Earlier in the day, President Barack Obama, appearing on
NBC's "Meet the Press," said investors could begin to show
greater concerns in the new year.
"If people start seeing that on January 1st, this problem
still hasn't been solved ... then obviously that's going to have
an adverse reaction in the markets," he said,
Investors have remained relatively sanguine about the
process, believing that it will eventually be solved. In the
past two months, markets have not shown the kind of volatility
that was present during the fight to raise the debt ceiling in
Both the Dow industrials and the S&P 500 lost 1.9 percent
last week, after falling for five straight sessions, the S&P
500's longest losing streak in three months. Equities have
largely performed well in the last two months despite constant
chatter about the fiscal cliff, but the last few days shows a
bit of increased worry.
The CBOE Volatility Index rose to its highest level since
June on Friday, closing at 22.72.