Wall Street flat amid stalemate in fiscal talks

NEW YORK Fri Dec 21, 2012 12:35am IST

Traders work the floor at the New York Stock Exchange in New York December 20, 2012. REUTERS/Andrew Kelly

Traders work the floor at the New York Stock Exchange in New York December 20, 2012.

Credit: Reuters/Andrew Kelly

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NEW YORK (Reuters) - U.S. stocks were little changed on Thursday as investors fretted that a deal on the U.S. budget wouldn't come as soon as they had hoped after President Barack Obama threatened to veto a controversial Republican plan.

NYSE Euronext NYX.N was the star of the day, surging more than 30 percent as the S&P 500's top percentage gainer, after IntercontinentalExchange Inc (ICE.N) said it would buy the operator of the New York Stock Exchange for $8.2 billion.

NYSE was up 32.8 percent at $31.95, while ICE shares vacillated between gains and losses. The stock was last down 0.8 percent at $127.22.

The market barely reacted to a round of strong data, including an upward revision of gross domestic product growth and stronger-than-expected home sales, suggesting talks to avert the "fiscal cliff," steep tax hikes and spending cuts due in 2013, remain the primary focus for markets.

Republicans in the U.S House of Representatives pushed ahead with their own fiscal plan in a move that muddles negotiations with the White House. Obama has vowed to veto the plan.

While investors have hoped for an agreement to come soon between policy makers, this seems unlikely as wrangling continues over the details.

"At least in the posturing it looks as if there are ultimatums put on the table, which tends to box either side in," said Quincy Krosby, market strategist at Prudential Financial in Newark, New Jersey.

Still, the absence of a significant sell-off shows "the market still believes that there will be an announcement of some sort. But as the clock is ticking, the most you're going to get is a stop-gap measure," said Krosby.

The Dow Jones industrial average edged down 3.77 points, or 0.03 percent, at 13,248.20. The Standard & Poor's 500 Index added 1.12 points, or 0.08 percent, to 1,436.93. The Nasdaq Composite Index slipped 3.58 points, or 0.12 percent, to 3,040.78.

Stocks rallied earlier in the week on signs of progress in the negotiations, led by banking and energy shares, which tend to outperform in times of economic expansion. On signs of complications, however, many have turned to hedging their bets through options and exchange-traded funds.

Herbalife (HLF.N) fell 5.3 percent to $35.35 in the wake of news that hedge fund manager Bill Ackman was betting against the company as part of his big end-of-the-year short.

The U.S. economy grew 3.1 percent in the third quarter, faster than previously estimated, while the number of Americans filing new claims for jobless benefits rose more than expected in the latest week.

"It is great to see this kind of growth, but investors know it could all disappear if there's no deal on the cliff," said Todd Schoenberger, managing partner at LandColt Capital in New York. "Macro data may be on the back burner for a while."

Existing home sales jumped 5.9 percent in November, more than expected, and by the fastest monthly place in three years. Housing shares gained 0.4 percent.

But KB Home (KBH.N) slid 5.5 percent to $15.75 as the company reported higher homebuilding costs and expenses in the fourth quarter.

(Additional reporting by Ryan Vlastelica; Editing by Bernadette Baum and Nick Zieminski)

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