Stocks Slide on Fiscal Cliff Stalemate, Fed Confusion

As they've done after the occasion of every recent FOMC meeting, traders sold off on the news, though today's slide was exacerbated at least a little by angst over the ongoing stalemate in Washington over fiscal cliff issues.

John Boehner, Speaker of the House, went before the microphones this morning, followed by Senate leader Harry Reid, and the two of them managed to give Wall Street a dose of temporary depression, sending stocks lower throughout the session.

The major indices slid into the final hour, but rebounded off their lows of the day when news leaked that President Obama and Boehner were to meet at the White House late this afternoon. While it will probably amount to nothing, as have their previous talks, the markets viewed it as slightly positive.

Traders are still mulling over yesterday's FOMC announcement, in which Chairman Bernanke tied raising interest rates to the unemployment rate and inflation. It's something of a crude cobbling of numbers that may or may not make sense, but, in the best counterintuitive spirit, lower unemployment and a recovering economy wiht low inflation (all good) would probably send stocks screeching into the abyss because interest rates would be on the rise.

Whatever the case and however it eventually plays out, it's a scenario unlikely to arrive any time soon, probably not for at least another 12 months, but it still has investors somewhat spooked.

Some good news for the economy came in the form of lower initial unemployment claims dropped to 343K in the most recent reporting period, on expectations of 375K. Retial sales, however, were a little disappointing, up just 0.3% in November, though that was better than the -0.3% from October.

The PPI was downright deflationary, posting a decline of 0.8% in November. Tomorrow's CPI reading will give an indication of price pressure or the lack thereof at the consumer level.

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