Stocks: Fiscal cliff fatigue weighs on investors

Investors often look for a “Santa Claus rally” at the end of December, as traders rebalance portfolios in preparation for next year. But Paul Radeke, vice president at KDV Wealth Management in Minneapolis, said fiscal cliff worries may keep Santa in check this year.A Santa rally is probably going to be mitigated by the negative sentiment created by the uncertainty,” he said. Wall Street has been in a funk lately as President Obama and lawmakers remain locked in negotiations over tax hikes and spending cuts that are set to kick in automatically on Jan. 1. Though many expect a last-minute compromise, the latest rhetoric from both sides suggests the talks are far from over. “The longer it goes on, the more it looks like neither side wants to budge,” said Kenny Landgraf, founder and principal at Kenjol Capital Management in Austin, Tx. “The market hates the uncertainty. Landgraf said he expected low volume this week, as investors begin to shut down ahead of the Christmas holiday. News of a deal out of Washington, however, would likely spark a “relief rally,” he said. Investors will get a snapshot of manufacturing in New York State on Monday morning with the release of the state’s monthly manufacturing survey. A report earlier this month showed that manufacturing activity had come to a standstill in the U.S., as fears about the fiscal cliff weighed on the sector.Employers that issue paychecks in the first week of January have to cut those checks during Christmas week if not a little sooner.Problem is, unless Congress passes a fiscal cliff deal by Thursday or Friday of next week, payroll processors will be left wondering how much they should withhold in taxes from employees. “I wish I knew,” said Dennis Danilewicz, senior director of disbursements services at the NYU Langone Medical Center. Given that negotiations between President Obama and House Speaker John Boehner appear to be making little progress, it’s very possible Congress won’t pass anything next week.Without official guidance from Washington, payroll administrators will likely stick to the 2012 withholding tables for paychecks in early January. “They’ll use what they have,” said Michael O’Toole, the senior director of government relations for the American Payroll Association.

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Stocks: Fiscal cliff fatigue weighs on investors

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