NEW YORK — Stocks ended the last week of November more or less where they started. Investors were watching closely while lawmakers in Washington worked at thrashing out a budget agreement.
After inching 3.76 points higher on Friday, the Dow Jones industrial average closed at 13,025.58. That’s a gain of just 16 points for the week, one of the Dow’s smallest moves this year.
Along the way, the market had several sharp turns both up and down after key figures in the talks, such as House Speaker John Boehner and President Barack Obama, offered contrasting views about how well the talks were going.
The Standard and Poor’s index edged up 0.23 point to 1,416.25. The index is up 0.5 percent for the week. The Nasdaq composite fell 1.79 points to 3,010.24. It gained 1.46 percent for the week.
The main driver for markets this week has been the talks between the White House and Congress over the “fiscal cliff,” a series of sharp government spending cuts and tax increases scheduled to start Jan. 1 unless an agreement is reached to cut the budget deficit. Economists say that those measures, if implemented, could push the U.S. economy back into a recession.
Optimism that a deal will be reached was greeted with rallies, while pessimistic comments from lawmakers were followed by selloffs.
“Right now the market is just going to be held hostage as to what happens in the next five hours, versus what’s going to happen in the next five years,” said Dan Veru, chief investment officer at Palisade Capital Management, in Fort Lee, N.J.
Obama argued Friday that allowing taxes to rise for the middle class would amount to a “lump of coal” for Christmas, while Boehner declared that negotiations to surmount a looming fiscal cliff are going “almost nowhere.”
“My sense is that investors are going to be busy reading headlines every day for the next three weeks,” said Jack Ablin, chief investment officer at BMO Group in Chicago.
Ablin says that he expects policymakers to reach a temporary agreement on the budget before year-end, before coming to a “Grand Bargain” next year.
He believes improving consumer confidence and rising house prices will underpin the economy and support demand for stocks.
Stocks are higher for the year. The Dow is up 6.5 percent, the S&P 500 index 12 percent. The indexes are on track to end the month little changed.
The yield on the 10-year Treasury note was little changed at 1.62 percent.
Yum Brands, which owns KFC, Pizza Hut and Taco Bell, fell $7.39 to $67.08. The fastfood operator reported disappointing sales and earnings forecasts. An analyst recommended that investors sell the stock.
Zynga, the maker of computer games including Farmville and Cityville, fell 16 cents to $2.46 after the company said late Thursday that it was loosening its relationship with Facebook.
While the deal frees Zynga from having to use Facebook as the exclusive social site for its games, the company relies on Facebook for most of the revenue it generates even as it works to establish its independence.
Business, Pages 30 on 12/01/2012