The stock markets in the United States declined due to growing speculations that the Federal Reserve will definitely reduce its $85 billion monthly quantitative easing as lawmakers in Congress agreed on a budget to prevent another government shutdown.

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In a telephone interview with Bloomberg, Jeffrey Kleintop, chief market strategist at LPL Financial LLC opined, “We’ve moved much closer for the Fed to taper in December. Markets are increasing their views that we are a week or so away from tapering because of improving economic data and clearing the hurdle for a budget deal. This deal is great; it’s a positive, but also a negative because it could prompt the Fed to taper sooner.”

Investors are evaluating the timing of the potential tapering of the monthly bond-buying program of the Fed. Some economist predicted that the Federal Open Market Committee (FOMC) could begin scaling back the stimulus during its meeting next week.

Yesterday, the negotiators in Congress agreed on a budget deal that would reduce the deficit by $20 billion to $30 billion. It would also lessen the imposed budget sequestration or automatic spending cuts.

Commenting on the proposed budget, Alexander Friedman, chief investment officer of the Wealth Management unit at UBS AG (NYSE:UBS) said, “The budget deal itself is at best a signal that we won’t shut the government down at the start of the new year.” He added that the real message for next year is the “real economy is getting better.” However, he opined that investors would not display similar bullishness seen over the past five years.

Meanwhile, Fitch Ratings opined that the budget deal is “an improvement in the functioning of budget policy making” and suggested that the risk of political brinkmanship to create another government shutdown and debt ceiling crisis is reduced.

U.S. Stock Markets

  • Dow Jones Industrial Average (DJIA)- 15, 843.53 (-0.81%)
  • S&P 500- 1,782.22 (-1.13%)
  • NASDAQ- 4,003.81(-1.40%)
  • Russell 2000- 1,100.21 (-1.74%)

European Markets

  • EURO STOXX 50 Price EUR- 2,947.31 (-0.46%)
  • FTSE 100 Index- 6,507.72 (-0.24%)
  • Deutsche Borse AG German Stock Index DAX- 9,077.11 (-0.41%)

Asia Pacific Markets

  • Nikkei 225- 15,515.06 (-0.62%)
  • Hong Kong Hang Seng Index- 23,338.24 (-1.71%)
  • Shanghai Shenzhen CSI 300 Index- 2,412.76 (-1.56%)

Stocks in Focus

The shares of MasterCard Inc (NYSE:MA) rose 3.39% to $790.57 per share after announcing that its board of directors approved several capital actions such as raising its quarterly dividend by 83% to $1.10, authorizing a $3.5 billion shares buyback, and a 10-for-1-stock split.

The stock price of Scripps Networks Interactive, Inc. (NYSE:SNI) climbed 7.68% to $81.03 on report that Discovery Communications Inc (NASDAQ:DISCA) is considering a possible acquisition bid. Scripps Networks owns HGTV and Food Network. In September, Discovery CFO Andy Warren stated that Scripps Networks is attractive and well run, and he believed that a right deal structure may exist.

Avanir Pharmaceuticals Inc (NASDAQ:AVNR) dropped more than 29% to $3.01 per share after the company revealed that the phase 2 study of AVP 923, the drug designed to treat patients with multiple sclerosis failed to meet is primary efficacy endpoint.