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Stock Market Today: Why We'll Continue to "Drift Sideways"

By , Money Morning •

The stock market today opened higher before falling once again as fiscal cliff concerns continue to weigh on investors' minds.

  • Stocks continue to slide- After Cisco Systems Inc. (Nasdaq: CSCO) reported its fiscal first-quarter earnings the markets started the day positive, but quickly turned red. One week after the election, fiscal cliff concerns continue to mount as the president and Congress meet later this week to hopefully negotiate a deal. So far no progress has been made on the debt reduction talks and until that happens don't expect the markets to change course. "We will continue to drift sideways until we see some progress on the fiscal cliff negotiations," Peter Jankovskis, co-chief investment officer for Oakbrook Investments told Bloomberg News in a phone interview.

A major reason for the post-election sell-off is the prospect of higher taxes next year, and yesterday U.S. President Barack Obama made it clear his agenda on that issue has not changed.

  • President calls for $1.6 trillion more in revenue- When President Obama meets with congressional leaders on Friday he will ask for double the amount of revenue that was discussed at budget talks in 2011. On Tuesday, the president met with union leaders and other liberal groups and stated he will now seek $1.6 trillion in additional revenue over the next decade. That will be accomplished partially through higher tax rates, something Republicans have not yet said they would agree to. But Republicans have offered to accept extra revenue if Democrats can agree to making structural changes to entitlement programs. "New revenue must be tied to genuine entitlement changes," Senate Minority Leader Mitch McConnell, R-KY, said Tuesday. "Republicans are offering bipartisan solutions and now it's the president's turn. He needs to bring his party to the table." An agreement, which included $800 billion of extra revenue, between House Speaker John Boehner, R-OH, and President Obama failed when the President asked for $1.2 trillion in additional revenue. That deal would have lowered the deficit by $4 trillion over ten years, and now President Obama is seeking $1.6 trillion, a number much higher than Republicans will likely agree to.

[ppopup id="70925"]READ: You don't have to fear the fiscal cliff if your money is ready for it.[/ppopup]

Here are a few of today's biggest losers getting hammered in the markets- along with one retailer that's soaring above the turmoil.

  • Navidea Biopharmaceuticals Inc. (NYSEAmex: NAVB) stock is down 6.5% in early trading after the FDA said it will take six months to review the company's Lymphoma diagnostic tool. Some investors had hoped for a much shorter review and that is what's sending the stock lower today.
  • Online Resources Corp. (Nasdaq: ORCC) is one of today's biggest losers. The company provides outsourced web and phone based financial technology services to financial institution, biller, card issuer and creditor clients. Online Resources recently lowered its full-year guidance and its stock is down almost 17% today.
  • Food Technology Service (Nasdaq: VIFL) hit a 52-week low of $4.25 today after its third-quarter earnings fell more than 20% from a year ago. The Mulberry, FL-based company owns and operates an irradiation facility that uses gamma radiation to provide contract sterilization services to the medical device, food, and consumer goods industries. VIFL stock is down almost 18% today.

And for today's market bright spot...

  • Abercrombie & Fitch Co. (NYSE: ANF) is up more than 26% today after its third-quarter earnings grew 40% from last year and soundly beat expectations. The casual-apparel retailer also raised its full-year outlook-- it now expects earnings per share of $2.85 to $3, compared with the company's prior estimate for $2.50 to $2.75.

By noon the markets were still heading south with the Dow Jones down 65 points, or 0.51%, and the S&P 500 down 6.20 points, or 0.45%

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