Tech titans, "cliff" hopes push indexes up

NEW YORK (Reuters) - Rising shares in technology companies helped push major stock indexes up around 1 percent on Tuesday, as the S&P 500 reached its best levels since mid-October, recouping its post-election selloff.

A 3.1 percent gain in Apple Inc's stock lifted the Nasdaq, as the largest U.S. company by market value rebounded from a week in which investors took profits before a possible tax rise next year. Prior to Tuesday's trading, Apple shares had lost 25 percent from an all-time intraday high hit in September.

Other major tech stocks also rose. Texas Instruments gained 3.8 percent to $30.97 after bumping up its profit target late Monday. That helped other chipmakers rally, with the PHLX Semiconductor index <.sox> up 2 percent. Microsoft rose 1.8 percent to $27.44.

"I see a lot of buying in tech, and that's taking the whole market up with it," said Tom Donino, co-head of trading at First New York Securities in New York.

The Dow Jones industrial average <.dji> gained 112.57 points, or 0.85 percent, at 13,282.45. The Standard & Poor's 500 Index <.spx> was up 13.23 points, or 0.93 percent, at 1,431.78. The Nasdaq Composite Index <.ixic> rose 40.95 points, or 1.37 percent, at 3,027.91.

Retailers like luggage maker Tumi Holding Inc and Michael Kors Holding gained on Tuesday after a positive report from Goldman Sachs Equity Research. Tumi was up 4.1 percent to $21.80, and Michael Kors gained 2.6 percent, reaching $51.08.

Traders voiced cautious optimism as the pace of negotiations over the "fiscal cliff" quickened. However, representatives from both parties cautioned that an agreement remains uncertain.

Republican House Speaker John Boehner called on President Barack Obama to propose a counter-offer on Tuesday.

"I guess in our own dysfunctional way, there is progress," said Frank Davis, director of sales and trading at LEK Securities in New York.

"Since conversations are occurring, it clarifies at least they are taking some action. My personal gut is they'll jostle this into the holiday week and try to do a last minute push."

Lawmakers worked toward a deal to avoid a series of automatic tax hikes and spending cuts that would hurt U.S. economic growth next year.

The lack of demonstrable progress has kept investors from making aggressive bets in recent weeks.

Still, stocks have steadily marched higher on thin volume. The S&P 500 hovered around 1433.38 on Tuesday, retracing losses incurred in the first seven sessions after Obama's re-election. Gains were broad, with more than two shares rising for every one falling on the New York Stock Exchange and winners outpacing losers on the Nasdaq Stock Exchange by nearly three-to-one.

The U.S. Treasury is selling its remaining stake in insurer American International Group Inc . AIG's shares were up 4.7 percent at $34.94.

The Fed began a two-day policy-setting meeting on Tuesday. The central bank is expected to announce a new round of Treasury bond purchases when the meeting ends on Wednesday to replace its "Operation Twist" stimulus which expires at the end of the year.

(Editing by Kenneth Barry and Nick Zieminski)

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U.S. Forecast as No. 2 Economy, but Energy Independent

WASHINGTON — A new intelligence assessment of global trends projects that China will outstrip the United States as the leading economic power before 2030, but that America will remain an indispensable world leader, bolstered in part by an era of energy independence.

Russia’s clout will wane, as will the economic strength of other countries reliant on oil for revenues, the assessment says.

The product of four years of intelligence-gathering and analysis, the study, by the National Intelligence Council, presents grounds for optimism and pessimism in nearly equal measure. The council reports to the director of national intelligence and has responsibilities for long-term strategic analysis.

One remarkable development it anticipates is a spreading affluence that leads to a larger global middle class that is better educated and has wider access to health care and communications technologies like the Internet and smartphones. The report assesses global trends until 2030.

“The growth of the global middle class constitutes a tectonic shift,” the study says, adding that billions of people will gain new individual power as they climb out of poverty. “For the first time, a majority of the world’s population will not be impoverished, and the middle classes will be the most important social and economic sector in the vast majority of countries around the world.”

At the same time, it warns, half of the world’s population will probably be living in areas that suffer from severe shortages of fresh water, meaning that management of natural resources will be a crucial component of global national security efforts.

But these developments also bring significant risks, allowing radicalized groups to enter world politics on a scale even more violent than that of current terrorist organizations by adopting “lethal and disruptive technologies,” including biological weapons and cyberweapons.

The study warns of the risk that terrorists could mount a computer-network attack in which the casualties would be measured not by the hundreds or thousands killed but by the millions severely affected by damaged infrastructure, like electrical grids being taken down.

“There will not be any hegemonic power,” the 166-page report says. “Power will shift to networks and coalitions in a multipolar world.”

It warns that at least 15 countries are “at high risk of state failure” by 2030, among them Afghanistan and Pakistan, but also Burundi, Rwanda, Somalia, Uganda and Yemen.

The study acknowledges that the future “is malleable,” and it lists important “game changers” that will most influence the global scene until 2030: a crisis-prone world economy, shortcomings in governance, conflicts within states and between them, the impact of new technologies and whether the United States can “work with new partners to reinvent the international system.”

The best-case situation for global security until 2030, according to the study, would be a growing political partnership between the United States and China. But it could take a crisis to bring Washington and Beijing together — something like a nuclear standoff between India and Pakistan resolved only by bold cooperation between the United States and China.

The worst-case situation envisions a stalling of economic globalization that would preclude any advancement of financial well-being around the world. That would be a likely outcome after an outbreak of a health pandemic that, even if short-lived, would result in closed borders and economic isolationism.

The chief author and manager of the project, Mathew Burrows, who is counselor for the National Intelligence Council, said the findings had been presented in advance in more than 20 nations to groups of academic experts, business leaders and government officials, including local intelligence officers.

In an interview, Mr. Burrows noted that the audiences in China were far more accepting of the American intelligence assessments — both those predicting China’s economic ascendancy and those warning of political dangers if there was no reform of governance in Beijing — than were audiences in Russia.

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Husband of Kate's Late Nurse Writes About 'Tragic Loss'

By Stephen M. Silverman

12/10/2012 at 01:45 PM EST

The husband of Jacintha Saldanha, the London nurse who last week answered the prank call from an Australian radio station about the condition of the pregnant Duchess of Cambridge and then apparently took her own life, has expressed his grief in a public message.

On his Facebook page, Ben Barboza writes, "I am devastated with the tragic loss of my beloved wife Jacintha in tragic circumstances, She will be laid to rest in Shirva, India."

In addition, King Edward VII's Hospital, where the 46-year-old mother of two worked, announced Monday the launch of a memorial fund in her honor. All donations will go to her family.

"Jacintha Saldanha," said the hospital chairman, Lord Glenarthur, in a statement, "was an outstanding nurse whose loss has shocked and saddened everyone at the hospital. Following discussions with her family, we have now established the Jacintha Saldanha Memorial Fund in her memory."

Donations may be sent to: Finance, King Edward VII's Hospital, 10 Beaumont St., London W1G 6AA, U.K.

Also on Monday, Mel Greig and Michael Christian, the two deejays who placed the phone call and impersonated Queen Elizabeth and Prince Charles inquiring after Kate's condition, apologized in interviews with two Australian TV stations.

"It was the worst phone call I've ever had in my life," said Greig. "There's not a minute that goes by that we don't think about her family and what they must be going through. And the thought that we may have played a part in that is gut-wrenching."

Their program has been terminated and they have been placed on suspension by Australia's 2DayFM.

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Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law.

Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison.

A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras.

"I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!"

Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5.

Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets.

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday.

King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses.

Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday.

Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love."

Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use.

Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'"

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress."

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition.

"New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

___

Johnson can be reached at https://twitter.com/GeneAPseattle

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Wall Street edges up, led by McDonald's and tech

NEW YORK (Reuters) - Stocks advanced slightly on Monday, helped by gains in McDonald's after the fast-food giant posted strong sales results, and a move up in technology shares.

Technology stocks were the S&P 500's best-performing sector as Hewlett-Packard Co climbed 2.5 percent to $14.14 on rumors that activist investor Carl Icahn is building a stake in the PC maker. The stock is down 44.5 percent for the year and ranks as the Dow's worst performer.

Tech was also supported by Cisco Systems , which gained 2.2 percent to $19.75 after the company presented its midterm growth strategy on Friday. Monday's rally put the stock on track for its fifth advance in the past six sessions.

U.S. President Barack Obama met with Republican House Speaker John Boehner on Sunday to negotiate a budget deal. A Boehner aide said Monday that talks are continuing. Obama is expected to make remarks at 2 p.m. from Michigan where he is touring an auto plant.

Persistent worries about the negotiations over the "fiscal cliff," a series of automatic tax hikes and spending cuts that could hurt economic growth next year, have kept market moves small of late.

"The funnel is starting to get narrower and narrower at the end of the year. We're waiting for political resolutions, waiting for headlines," said Brian Battle, director of trading at Performance Trust Capital Partners, in Chicago.

The benchmark S&P 500 index has yet to see a move greater than 0.5 percent in either direction for December, and hasn't moved more than 1 percent either way since November 23. However, the market has regained most of the losses incurred post-election as investors refocused on the fiscal cliff.

McDonald's Corp gave the Dow a jolt, gaining 1.3 percent to $89.66, as its November sales were stronger than expected and showed a bounce back from a decline in October.

The Dow Jones industrial average <.dji> rose 22.11 points, or 0.17 percent, to 13,177.24. The Standard & Poor's 500 Index <.spx> gained just 0.75 of a point, or 0.05 percent, at 1,418.82. The Nasdaq Composite Index <.ixic> was up 5.38 points, or 0.18 percent, at 2,983.42.

News out of Italy kept sentiment in check as Prime Minister Mario Monti said he would resign after the approval of the 2013 budget. The move added to uncertainty about progress being made to tackle the euro zone's debt problem and drove Italy's borrowing costs higher.

(Editing by Jan Paschal)

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Changes to Agriculture Highlight Cuba’s Problems

HAVANA — Cuba’s liveliest experiment with capitalism unfolds every night in a dirt lot on the edge of the capital, where Truman-era trucks lugging fresh produce meet up with hundreds of buyers on creaking bicycle carts clutching wads of cash.

“This place, it feeds all of Havana,” said Misael Toledo, 37, who owns three small food stores in the city. “Before, you could only buy or sell in the markets of Fidel.”

The agriculture exchange, which sprang up last year after the Cuban government legalized a broader range of small businesses, is a vivid sign of both how much the country has changed, and of all the political and practical limitations that continue to hold it back.

President Raúl Castro has made agriculture priority No. 1 in his attempt to remake the country. He used his first major presidential address in 2007 to zero in on farming, describing weeds conquering fallow fields and the need to ensure that “anyone who wants can drink a glass of milk.”

No other industry has seen as much liberalization, with a steady rollout of incentives for farmers. And Mr. Castro has been explicit about his reasoning: increasing efficiency and food production to replace imports that cost Cuba hundreds of millions of dollars a year is a matter “of national security.”

Yet at this point, by most measures, the project has failed. Because of waste, poor management, policy constraints, transportation limits, theft and other problems, overall efficiency has dropped: many Cubans are actually seeing less food at private markets. That is the case despite an increase in the number of farmers and production gains for certain items. A recent study from the University of Havana showed that market prices jumped by nearly 20 percent in 2011 alone. And food imports increased to an estimated $1.7 billion last year, up from $1.4 billion in 2006.

“It’s the first instance of Cuba’s leader not being able to get done what he said he would,” said Jorge I. Domínguez, vice provost for international affairs at Harvard, who left Cuba as a boy. “The published statistical results are really very discouraging.”

A major cause: poor transportation, as trucks are in short supply, and the aging ones that exist often break down.

In 2009, hundreds of tons of tomatoes, part of a bumper crop that year, rotted because of a lack of transportation by the government agency charged with bringing food to processing centers.

“It’s worse when it rains,” said Javier González, 27, a farmer in Artemisa Province who described often seeing crops wilt and rot because they were not picked up.

Behind him were the 33 fertile, rent-free acres he had been granted as part of a program Mr. Castro introduced in 2008 to encourage rural residents to work the land. After clearing it himself and planting a variety of crops, Mr. Gonzalez said, he was doing relatively well and earned more last year than his father, who is a doctor, did.

But Cuba’s inefficiencies gnawed at him. Smart, strong, and ambitious, he had expansion plans in mind, even as in his hand he held a wrench. He was repairing a tractor part meant to be grading land. It was broken. Again.

The 1980s Soviet model tractor he bought from another farmer was as about good as it gets in Cuba. The Cuban government maintains a monopoly on selling anything new, and there simply is not enough of anything — fertilizer, or sometimes even machetes — to go around.

Government economists are aware of the problem. “If you give people land and no resources, it doesn’t matter what happens on the land,” said Joaquin Infante of the Havana-based Cuban National Association of Economists.

But Mr. Castro has refused to allow what many farmers and experts see as an obvious solution to the shortages of transportation and equipment: Let people import supplies on their own. “It’s about control,” said Philip Peters, a Cuba analyst with the Lexington Institute, a Virginia-based research group.

Other analysts agree, noting that though the agricultural reforms have gone farther than other changes — like those that allow for self-employment — they remain constrained by politics.

“The government is not ready to let go,” said Ted Henken, a Latin American studies professor at Baruch College. “They are sending the message that they want to let go, or are trying to let go, but what they have is still a mechanism of control.”

For many farmers, that explains why land leases last for 10 years with a chance to renew, not indefinitely or the 99 years offered to foreign developers. It is also why many farmers say they will not build homes on the land they lease, despite a concession this year to allow doing so.

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Software guru McAfee did not have heart attack: lawyer

GUATEMALA CITY (Reuters) – Software pioneer John McAfee did not have a heart attack in Guatemala as originally thought, but is suffering from stress and hypertension, his lawyer Telesforo Guerra said on Thursday.

“He never had a heart attack. Nothing like that,” Guerra said in Guatemala City. “I’m not a doctor. I’m just telling you what the doctors told me. He was suffering from stress, hypertension and tachycardia (an abnormally rapid heartbeat).”

After being rushed to a hospital in an ambulance on Thursday, McAfee, 67, was later spirited out of the building out of sight of reporters and into a police patrol car, Guerra said.

McAfee, who is fighting deportation from Guatemala, was detained on Wednesday after crossing illegally into the country from neighboring Belize. Police in Belize want to question McAfee in connection with his neighbor’s murder.

Earlier, Guerra said McAfee had suffered two mild heart attacks in the morning.

(Reporting by Lomi Kriel; Editing by Stacey Joyce)

Internet News Headlines – Yahoo! News

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Kate Middleton & Anderson Cooper Get Love and Inspire Awe from Readers

By Julia Haskins

12/09/2012 at 01:00 PM EST

Prince William and Kate; Anderson Cooper

Splash News Online

We love hearing your passionate responses to PEOPLE.com news through article emoticomments and readers didn't disappoint this week.

You loved Kate's pregnancy news, were wowed by Anderson Cooper's bout with blindness and were disheartened by the tragic murder-suicide of Kansas City Chiefs linebacker Jovan Belcher.

Keep sounding off by clicking at the bottom of every article, and let us know what makes you happy, sad, or just plain laugh out loud.

You were filled with love for the Duchess of Cambridge, who is carrying a new royal. You also adored attentive dad-to-be Prince William, who was at Kate's side while she was being treated for severe morning sickness.

You were devastated to hear about Kansas City Chiefs player Jovan Belcher, who killed his girlfriend, Kasandra M. Perkins, and then shot and killed himself in front of his coach and general manager. The couple had a 3-month-old daughter.

Ouch! Anderson Cooper's painful temporary blindness after burning his retinas while on assignment had you saying, "Wow!" His mishap comes with a lesson, though: Don't forget to wear your sunglasses.

Demi Moore made you giggle again this week, but this time it was because of her dance moves. "Demi was wild and crazy and having the time of her life" at a party at Alex Rodriguez's Miami home, a source told PEOPLE. Moore is in town for Art Basel where the scene is buzzing about whether she is or isn't dating 26-year old art dealer Vito Schnabel.

You weren't as happy as Peter Facinelli about his budding romance with Nurse Jackie costar Jaimie Alexander. Facinelli's split with Jennie Garth might be on your minds. But rest assured, even though the split hasn't been easy, Garth herself says she's "happy that he is happy."

Check back next week for another must-read roundup, and see what readers are reacting to every day here.

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Smokers celebrate as Wash. legalizes marijuana

SEATTLE (AP) — The crowds of happy people lighting joints under Seattle's Space Needle early Thursday morning with nary a police officer in sight bespoke the new reality: Marijuana is legal under Washington state law.

Hundreds gathered at Seattle Center for a New Year's Eve-style countdown to 12 a.m., when the legalization measure passed by voters last month took effect. When the clock struck, they cheered and sparked up in unison.

A few dozen people gathered on a sidewalk outside the north Seattle headquarters of the annual Hempfest celebration and did the same, offering joints to reporters and blowing smoke into television news cameras.

"I feel like a kid in a candy store!" shouted Hempfest volunteer Darby Hageman. "It's all becoming real now!"

Washington and Colorado became the first states to vote to decriminalize and regulate the possession of an ounce or less of marijuana by adults over 21. Both measures call for setting up state licensing schemes for pot growers, processors and retail stores. Colorado's law is set to take effect by Jan. 5.

Technically, Washington's new marijuana law still forbids smoking pot in public, which remains punishable by a fine, like drinking in public. But pot fans wanted a party, and Seattle police weren't about to write them any tickets.

In another sweeping change for Washington, Gov. Chris Gregoire on Wednesday signed into law a measure that legalizes same-sex marriage. The state joins several others that allow gay and lesbian couples to wed.

The mood was festive in Seattle as dozens of gay and lesbian couples got in line to pick up marriage licenses at the King County auditor's office early Thursday.

King County and Thurston County announced they would open their auditors' offices shortly after midnight Wednesday to accommodate those who wanted to be among the first to get their licenses.

Kelly Middleton and her partner Amanda Dollente got in line at 4 p.m. Wednesday.

Hours later, as the line grew, volunteers distributed roses and a group of men and women serenaded the waiting line to the tune of "Chapel of Love."

Because the state has a three-day waiting period, the earliest that weddings can take place is Sunday.

In dealing with marijuana, the Seattle Police Department told its 1,300 officers on Wednesday, just before legalization took hold, that until further notice they shall not issue citations for public marijuana use.

Officers will be advising people not to smoke in public, police spokesman Jonah Spangenthal-Lee wrote on the SPD Blotter. "The police department believes that, under state law, you may responsibly get baked, order some pizzas and enjoy a 'Lord of the Rings' marathon in the privacy of your own home, if you want to."

He offered a catchy new directive referring to the film "The Big Lebowski," popular with many marijuana fans: "The Dude abides, and says 'take it inside!'"

"This is a big day because all our lives we've been living under the iron curtain of prohibition," said Hempfest director Vivian McPeak. "The whole world sees that prohibition just took a body blow."

Washington's new law decriminalizes possession of up to an ounce for those over 21, but for now selling marijuana remains illegal. I-502 gives the state a year to come up with a system of state-licensed growers, processors and retail stores, with the marijuana taxed 25 percent at each stage. Analysts have estimated that a legal pot market could bring Washington hundreds of millions of dollars a year in new tax revenue for schools, health care and basic government functions.

But marijuana remains illegal under federal law. That means federal agents can still arrest people for it, and it's banned from federal properties, including military bases and national parks.

The Justice Department has not said whether it will sue to try to block the regulatory schemes in Washington and Colorado from taking effect.

"The department's responsibility to enforce the Controlled Substances Act remains unchanged," said a statement issued Wednesday by the Seattle U.S. attorney's office. "Neither states nor the executive branch can nullify a statute passed by Congress."

The legal question is whether the establishment of a regulated marijuana market would "frustrate the purpose" of the federal pot prohibition, and many constitutional law scholars say it very likely would.

That leaves the political question of whether the administration wants to try to block the regulatory system, even though it would remain legal to possess up to an ounce of marijuana.

Alison Holcomb is the drug policy director of the American Civil Liberties Union of Washington and served as the campaign manager for New Approach Washington, which led the legalization drive. She said the voters clearly showed they're done with marijuana prohibition.

"New Approach Washington sponsors and the ACLU look forward to working with state and federal officials and to ensure the law is fully and fairly implemented," she said.

___

Johnson can be reached at https://twitter.com/GeneAPseattle

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Wall St Week Ahead: "Cliff" worries may drive tax selling

NEW YORK (Reuters) - Investors typically sell stocks to cut their losses at year end. But worries about the "fiscal cliff" - and the possibility of higher taxes in 2013 - may act as the greatest incentive to sell both winners and losers by December 31.

The $600 billion of automatic tax increases and spending cuts scheduled for the beginning of next year includes higher rates for capital gains, making tax-related selling even more appealing than usual.

Tax-related selling may be behind the weaker trend in the shares of market leader Apple , analysts said. The stock is down 20 percent for the quarter, but it's still up nearly 32 percent for the year.

Apple dropped 8.9 percent in the past week alone. For a stock that gained more than 25 percent a year for four consecutive years, the embedded capital gains suddenly look like a selling opportunity if one's tax bill is going to jump sharply just because the calendar changes.

"Tax-loss selling is always a factor (but) tax-gains selling has been a factor this year," said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

"You have a lot of high-net-worth individuals in taxable accounts, and that could be what's affecting stocks like Apple. If you look at the stocks that people have their largest gains in, they seem to be under a little bit more pressure here than usual."

Of this year's top 20 performers in the S&P 1500 index, which includes large, small and mid-cap stocks, all but four have lost ground in the last five trading sessions.

The rush to avoid higher taxes on portfolio gains could cause additional weakness.

The S&P 500 ended the week up just 0.1 percent after another week of trading largely tied to fiscal cliff negotiation news, which has pushed the market in both directions.

A PAIN PILL FROM THE FED?

This week's Federal Reserve meeting could offer some relief if policymakers announce further plans to help the lackluster U.S. economy. The Federal Open Market Committee will meet on Tuesday and Wednesday. The policy statement is expected at about 12:30 p.m. EST on Wednesday after the conclusion of the meeting - the Fed's last one for the year.

Friday's jobs report showing non-farm payrolls added 146,000 jobs in November eased worries that superstorm Sandy had hit the labor market hard.

"After the FOMC meeting, I think it's going to be downhill from there as worries about the fiscal cliff really take center stage and prospects of a deal become less and less likely," said Mohannad Aama, managing director of Beam Capital Management LLC in New York.

"I think we are likely to see an escalation in profit-taking ahead of tax rates going up next year," he said.

MORE VOLUME AND VOLATILITY

Volume could increase as investors try to shift positions before year end, some analysts said.

While most of that would be in stocks, some of the extra trading volume could spill over into options, said J.J. Kinahan, TD Ameritrade's chief derivatives strategist.

Volatility could pick up as well, and some of that is already being seen in Apple's stock.

"The actual volatility in Apple has been very high while the market itself has been calm. I expect Apple's volatility to carry over into the market volatility," said Enis Taner, global macro editor at RiskReversal.com, an options trading firm in New York.

Shares of Apple, the largest U.S. company by market value, on Friday registered their worst week since May 2010. In another bearish sign, the stock's 50-day moving average fell to $599.52 - below its 200-day moving average at $601.38.

"There's a lot of tax-related selling happening now, and it will continue to happen. Apple is an example, even (though) there are other factors involved with Apple," Aama said.

If tax rates are going up, an investor would sell now to book gains and pay lower capital gains taxes, according to Aama. But if an investor has capital losses, then "you take losses and have them count against capital gains or regular income if you do not have any offsetting capital gains.

"In essence, higher capital gains tax rates will give your losses a higher value next year than this year as the income tax shield will be worth more in 2013. So if you have no capital gains this year, you are better off holding off on selling your losers in 2012 and waiting till 2013," he said in an email.

While investors may be selling stocks to avoid higher taxes in 2013, companies may continue to announce special and accelerated dividend payments before year end. Among the latest, Expedia announced a special dividend of 52 cents a share to be paid on December 28.

To be sure, the big sell-off in stocks following the November 6 election was likely related to tax selling, making it hard to judge how much more is to come.

Even with stocks' recent declines, the three major U.S. stock indexes are still up for the year. The Dow Jones industrial average <.dji> is up 7.7 percent for 2012 so far, while the benchmark Standard & Poor's 500 index <.spx> is up 12.8 percent and the Nasdaq Composite Index <.ixic> is up 14.3 percent for the year to date.

Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, said there is a decent chance that the market could rally before the year ends.

"Even with little or spotty news that one would put in the positive bucket regarding the (cliff) negotiations, the market has basically hung in there, and I think it's hung in there in anticipation of something coming," he said.

(Wall St Week Ahead runs every Sunday. Questions or comments on this column can be emailed to: caroline.valetkevitch(at)thomsonreuters.com)

(Reporting by Caroline Valetkevitch; Editing by Jan Paschal; Multimedia versions of Reuters Top News are now available for:; 3000 Xtra: visit Reuters Top News; BridgeStation: view story .134; For London stock market outlook please click on <.l>; Pan-European stock market outlook <.eu>; Tokyo stock market outlook <.t>)

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