Courtesy of John Nyaradi.

Investors lost their enthusiasm on Tuesday as the December 13 budget deadline approached with more dysfunction on Capitol Hill. 

The S&P 500 Index retreated from Monday’s record high on Tuesday, as investors watched another budget battle unfold in Washington, with the clock ticking down to the December 13 deadline.  Although this latest battle appears less toxic than the previous episodes, investors obviously remained skeptical as the major stock indices fell into the red.

The Dow Jones Industrial Average (NYSEARCA:DIA) lost 52 points to finish Tuesday’s trading session at 15,973 for a 0.33 percent decline.  The S&P 500 (NYSEARCA:SPY) fell 0.32 percent to close at 1,802.

The Nasdaq 100 (NASDAQ:QQQ) dipped 0.03 percent to finish at 3,514.  The Russell 2000 (NYSEARCA:IWM) dropped 0.87 percent to end the day at 1,119.  No Firm Direction Yet

In other major markets, oil (NYSEARCA:USO) jumped 1.15 percent to close at $35.31.

On London’s ICE Futures Europe Exchange, January futures for Brent crude oil advanced 8 cents (0.07 percent) to $109.22/bbl. (NYSEARCA:BNO).

February gold futures advanced $27.40 (2.22 percent) to $1,261.60 per ounce (NYSEARCA:GLD).

Transports got stuck in the snow on Tuesday, as the Dow Jones Transportation Average (NYSEARCA:IYT) fell 0.67 percent.

In Japan, stocks declined moderately, as investors took profits after Monday’s 2.29 percent surge, which was the most significant, single-session advance by the Nikkei 225 in three months.  Monday’s jump resulted from further weakening of the yen.  The exchange rate for the yen remained near 103.27 per dollar through the second half of Tuesday’s trading session in Tokyo.  A weaker yen causes Japanese exports to be more competitively priced in foreign markets (NYSEARCA:FXY).  The Nikkei 225 Stock Average declined 0.25 percent to 15,611 (NYSEARCA:EWJ).

Stocks made a slight decline in China after the National Bureau of Statistics reported that the nation’s industrial production increased by a less-than-expected 10 percent on a year-over-year basis in November. Economists had been expecting a 10.1 percent rise.  Retail Sales beat expectations by soaring 13.7 percent in November on a year-over-year basis.  The Shanghai Composite Index dipped 0.03 percent to 2,237 (NYSEARCA:FXI).  Hong Kong’s Hang Seng Index declined 0.28 percent to end the day at 23,744 (NYSEARCA:EWH).

In Europe, stocks sank after the French National Institute of Statistics and Economic Studies (INSEE) reported that the nation’s industrial production declined 0.3 percent in October after making a 0.3 percent decline in September.  Meanwhile, Christine Lagarde, Managing Director of the International Monetary Fund (IMF), insisted that it was premature to declare the Eurozone economic crisis over with 12 percent of the workforce unemployed.  Lagarde called upon the European Central Bank to enact reforms in order to restore “the flow of credit on reasonable terms to businesses and households”.  When the Risk Increases, One Must Become Careful

The Euro STOXX 50 Index finished Tuesday’s session with a 0.93 percent drop to 2,960 – falling further below its 50-day moving average of 3,019.  Its Relative Strength Index is 37.94 (NYSEARCA:FEZ).

Technical indicators revealed that the S&P 500 remained above its 50-day moving average of 1,756 despite retreating 0.32 percent to finish Tuesday’s session at 1,802.  Its Relative Strength Index declined from 62.77 to 59.25.  The MACD is now on a slightly downward trajectory, which would suggest that the S&P could continue to decline during the immediate future.

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