DJI - NEW YORK, Dec 31 (Reuters) - U.S. stocks closed out 2012 with their strongest day in more than a month, putting the S&P 500 up 13.4 percent for the year, as lawmakers in Washington closed in on a resolution to the "fiscal cliff" negotiations.
The S&P 500's gain for the year marks its best performance since 2009, as stocks navigated through debt crises in Europe and the United States that dominated the headlines. Still, with numerous issues involving budget talks unresolved, markets could still be open to a shock should the deal break down unexpectedly.
Fittingly, in the last session of the year, stocks bounced back and forth on the headlines out of Washington, as both President Barack Obama and Republican Senate leader Mitch McConnell issued statements indicating a deal to avert the cliff was close.
"The worst news could have been the president coming out and saying, 'We don’t have a deal and we’ve giving up,' and he didn’t say that," said Ron Florance, managing director of investment strategy for Wells Fargo Private Bank, based in Scottsdale, Arizona.
"My personal skepticism, I don’t trust anything out of Washington until it is signed, sealed and delivered, and it is not signed, sealed and delivered."
While a deal on the cliff is not yet official, investors may be ready to take on more risk next year in hopes of a greater reward.
McConnell said an agreement had been reached with Democrats on all of the tax issues in the potential deal, removing a large hurdle in the talks. An agreement is needed in order to avert a combination of tax hikes and spending cuts that many believe could push the U.S. economy into recession.
A source familiar with the matter said an emerging deal, if adopted by Congress and President Barack Obama, would raise $600 billion in revenue over the next 10 years by increasing tax rates for individuals making more than $400,000 and households earning above $450,000 annually.
Despite the uncertainty, the market encountered only occasional bouts of volatility this year. For the first time since 2006, the CBOE Volatility Index or VIX , the market's favored indicator of anxiety, did not surpass the 30 level, a threshold that usually signals heightened worry among investors.
“Given all the threats in 2012, the VIX was relatively tranquil," said Bill Luby, the author of the VIX and More blog in San Francisco, citing the crises in Spain and Greece, along with constant intervention from the Federal Reserve.
The Dow Jones industrial average gained 166.03 points, or 1.28 percent, to end at 13,104.14. The Standard & Poor's 500 Index gained 23.76 points, or 1.69 percent, to finish at 1,426.19. The Nasdaq Composite Index gained 59.20 points, or 2.00 percent, to close at 3,019.51.
Monday's gains enabled the S&P 500 to snap a five-day losing streak, its longest skid since September.
The S&P 500 closed out 2012 with a 13.4 percent gain for the year, compared with a flat performance in 2011. The Dow rose 7.3 percent in 2012 and the Nasdaq climbed 15.9 percent.
Volume was modest, with about 6.06 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, slightly below the daily average of 6.42 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of 6 to 1, while on the Nasdaq, four stocks rose for every one that fell.
NYMEX - SINGAPORE, Dec 31 (Reuters) - U.S. crude futures slipped on Monday for a third straight session on worries that the United States may not reach a budget deal by Jan. 1 to prevent a fiscal crisis that could erode fuel demand at the world's largest oil consumer.
CBOT Soybean - CBOT soybean futures slipped on the last trading day of the year Monday as favorable crop weather in South America fueled expectations for large harvests.
· Front-month January soybeans unofficially closed down 5-1/2 cents at $14.18-1/2 a bushel, while March soybeans were down 9 cents at $14.09 a bushel at the close of trading.
· Improving weather in South America was particularly negative for deferred futures contracts, said Jack Scoville, vice president of Price Futures Group.
· Brazil and Argentina will compete with the United States for export business after they harvest their crops in the spring.
· USDA on Monday said private exporters struck deals to sell 140,000 tonnes of U.S. soybeans to unknown destinations for delivery this marketing year.
· USDA said 35.5 million bushels of soybeans were inspected for export last week, within expectations for 35 million to 38 million.
· Front-month soybeans have pulled back 20.1 percent since reaching a record high in September on concerns about crop losses from the worst U.S. drought in more than 50 years. The market in 2012 scored its highest yearly average price on record.
· Front-month soybeans unofficially ended down 8.3 percent for the quarter, the biggest quarterly loss since the third-quarter of 2009. The quarterly loss breaks a string of four straight positive quarters.
· Front-month soybeans unofficially ended down 1.4 percent for the month, the fourth straight monthly loss and longest streak of monthly losses since five-months of declines from July to November 2008.
FCPO - SINGAPORE, Dec 31 (Reuters) - Malaysian palm oil futures fell on Monday, weighed by lower exports although losses were limited by expectations that heavy rains in the world's No.2 producer may disrupt production and bring down record high stocks.
Palm oil notched its worst annual performance since the financial crisis in 2008, losing more than one-fifth thanks to high stocks and a sluggish global growth that has dented edible oil demand.
For the coming year, traders are watching the impact of Malaysia's zero export tax for crude palm oil in January and a stricter import rule for edible oil to be enforced by China, the world's second-largest edible oil buyer.
"Malaysia's new export duty will be tested. There are more concerns on the tax structure because it is now an even playground for both countries (Malaysia and Indonesia)," said a dealer with a foreign commodities brokerage in Malaysia.
"I foresee an even fiercer price competition."
Malaysian cargoes are still likely to be cheaper as it set the January export tax rate at zero compared to Indonesia's 7.5 percent.
On the last trading day of the year, the benchmark March contract on the Bursa Malaysia Derivatives Exchange lost 2.6 percent to close at 2,433 ringgit ($796) per tonne.
Prices hit an intraday high of 2,517 ringgit per tonne -- a level last seen on Nov. 2, prompting some traders to book profits soon after.
Total traded volumes stood at 43,399 lots of 25 tonnes each, much higher than the usual 25,000 lots as traders squared their positions.
Malaysian palm exports during December fell 5.7 percent to 1,568,510 tonnes from 1,663,092 tonnes a month ago, said cargo surveyor Intertek Testing Services on Monday.
Another cargo surveyor, Societe Generale de Surveillance, reported a steeper drop at 7.9 percent for the same period.
Concerns of heavy rains in Malaysia disrupting supply persisted after the weather office upgraded its warning on Monday from yellow to orange stage for key producing states such as Pahang and Johor.
Brent crude slipped toward $110 per barrel on Monday, on worries the United States may not reach a deal by Jan. 1 to prevent a fiscal crisis that could erode fuel demand.
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