Stocks open higher on housing data, but 'cliff' looms

39 min.

JeeYeon Park , CNBC

Stocks opened higher Wednesday as investors returned from the Christmas holiday, following a better-than-expected Case-Shiller home price index and as President Obama cut short his vacation in Hawaii to deal with the "fiscal cliff" negotiations.

The Dow Jones Industrial Average opened in positive territory, led by Caterpillar.?

The S&P 500 and the Nasdaq also gained at the open. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 18.

The S&P/Case Shiller home price index of 20 major cities rose 0.7 percent in October on a seasonally adjusted basis, topping expectations for a gain of 0.5 percent. And prices in the 20 cities jumped 4.3 percent from last year, beating forecasts for an increase of 4.0 percent.?

Obama will return to Washington early on Thursday, according to the White House, to deal with the deadlocked talks between Democrats and Republicans on what to do with $600 billion in tax increases and automatic spending cuts, due to kick in on Jan. 1.

Wall Street has been increasingly worried that the two sides may not reach a deal in time. Art Cashin, director of floor operations for UBS, said such an outcome would result in a 95 percent chance of a U.S. recession next year.

The worries over the fiscal cliff and an extremely weak report on the holiday shopping season could put retail stocks under pressure.?

Sales in the two months before Christmas rose just 0.7 compared to last year, the slowest rate of growth since 2008, according to the MasterCard Advisors Spending Pulse. Analysts had been expecting growth of 3 to 4 percent.

Amazon.com and Netflix were both slightly lower after an outage at an Amazon web service center impacted Netflix subscribers in the U.S., Canada, and Latin America on Christmas eve. Service was fully restored by Christmas day.?

Stocks in Europe were closed for the Boxing Day holiday. In Asia, markets closed higher on thin volumes, with Japanese stocks rallying to hit nine-month highs on a weaker yen.

Coming Up This Week:

• THURSDAY: Jobless claims, new home sales, consumer confidence
  
• FRIDAY: Pending home sales
  

Source: http://www.nbcnews.com/business/stocks-open-higher-housing-data-cliff-looms-1C7660220

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