Market Wrap: Global Worries Keep Market Flat

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Pacific Press/Getty ImagesFollowing protests over the weekend, Greece announced an early presidential election.

By Caroline Valetkevitch

The S&P 500 (^GPSC) ended nearly flat on Tuesday as concerns about global weakness and political turmoil were offset by gains in technology and energy shares. The index managed to erase a 1.3 percent decline from earlier in the day, moving more than 26 points to its high of the day from its low.

Energy and technology shares boosted the market and the Nasdaq (^IXIC) ended the day higher. Apple (AAPL) shares climbed 1.5 percent to $114.12, giving the Nasdaq and S&P 500 their biggest boost. Small-cap stocks also bounced, with the Russell 2000 (^RUT) gaining 1.8 percent.

Advancing issues outnumbered declining ones on the New York Stock Exchange by a ratio of 1.53 to 1. Still, the number of NYSE stocks making new 52-week lows was 255, compared with just 117 making new highs.

Turmoil in Greece

"The market in general is digesting a very big move since its Oct. 15 low," said Adam Sarhan, chief executive of Sarhan Capital in New York. "Less than two months ago we were flat for the year, so investors are hypersensitive to potential downdrafts in the market at this stage in the game."

Greece unnerved investors after the government brought a presidential vote forward in a political gamble that raised uncertainty over the country's transition out of its bailout.

Brent crude rebounded to settle up 1 percent after hitting a fresh five-year low of $65.29. Oil prices have been under pressure as the dollar strengthened and OPEC decided against an output cut, with Brent down more than 40 percent from its June high. The S&P energy index ended up 0.9 percent after losing 3.9 percent on Monday.

The Dow Jones industrial average (^DJI) fell 51.28 points, or 0.29 percent, to 17,801.2, the S&P 500 lost 0.49 points, or 0.02 percent, to 2,059.82 and the Nasdaq Composite added 25.77 points, or 0.54 percent, to 4,766.47.

Thinking About Next Week's Fed Meeting

Adding to the cautious tone was uncertainty over whether the U.S. Federal Reserve will change its pledge to keep rates near zero for a "considerable time" when policymakers meet next week.

U.S. telecom stocks led losses on the S&P 500 and Dow on concerns about an industry price war. Verizon Communications (VZ) warned that promotions in its wireless business would bite into its fourth-quarter profit. The S&P telecom index lost 3.2 percent while Verizon shares fell 4 percent to $46.92.

About 7.3 billion shares changed hands on U.S. exchanges, above the 6.5 billion average this month, according to BATS Global Markets. The S&P 500 is up 10.6 percent from its Oct. 15 close and is up 11.4 percent for the year so far.

U.S.-listed shares of Seadrill (SDRL) gained 5.2 percent to $12.17. John Fredriksen, the biggest owner of the offshore driller, purchased another 1.3 million shares in the firm to raise his stake to 24.15 percent.

What to Watch Wednesday

  • The Energy Information Administration releases its weekly reports on petroleum inventories at 10:30 a.m.
  • The Treasury Department releases its monthly budget at 2 p.m.

These companies are scheduled to release quarterly financial results:

  • Costco (COST)
  • Hovnanian Enterprises (HOV)
  • Lands' End (LE)
  • Men's Wearhouse (MW)
  • Restoration Hardware (RH)
  • Wet Seal (WTSL)
  • Vera Bradley (VRA)

11 Crucial End-of-Year Financial Tips
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Market Wrap: Global Worries Keep Market Flat
If you don't already have one, now's the time to establish a traditional individual retirement account or a Roth IRA, and if you're self-employed, a Solo 401K or SEP-IRA. Don't worry if you don't have enough money to fully fund the account. As long as you establish the account by the end of the calendar year, you'll be able to retroactively contribute to it through April 15 of next year, and those funds can still count toward your 2014 taxes.
For 2014, you're allowed to contribute up to $17,500 to your 401(k). (If you're 50 and over, that limit increases to $23,000.) This is the maximum you're able to save per year and still defer paying income tax on that money.

Since 401(k) contributions must be made through payroll deductions, talk to your company's payroll department about adjusting your December contribution or adding a lump-sum amount from your holiday bonus when you receive it. Also, chat with your human resource department to see if it will let you retroactively earmark contributions made prior to April 15, 2015 for the 2014 tax year.
If you're age 70½ or older, you're required to take a certain amount from your 401(k) and traditional IRA each calendar year. If you don't, you could be facing sizable penalty fees from the IRS (as in 50 percent of the amount you should have taken out). To find out how much you should take out by the end of the year, talk to your financial adviser or see this calculator.
You may qualify for a state income tax deduction by contributing to your children's 529 college savings plan.While every state's 529 tax deduction rules and contribution limits vary, most states will accept contributions until all account balances for the same beneficiary reach $235,000 to $412,000. Check with your state to discover your specific limits.
Depending on your financial situation, converting some of the funds from your traditional IRA into a Roth IRA could be a smart strategy. You're able to withdraw the funds from a Roth IRA tax-free, and Roth IRAs are excluded from required minimum distribution rules. Furthermore, if you're ineligible to contribute to a traditional or Roth IRA due to income limitations, you can still contribute to a "nondeductible" traditional IRA and then process what's known as a "backdoor" Roth conversion.
When you sell stocks for a gain, you face capital gains taxes. But you can counterbalance these gains by selling some of your "losing" stocks and writing off the losses. Talk with your accountant about whether this strategy would work for you; if it will, you need to harvest your losses before the year closes out.
Do you have a flexible spending account, or FSA, at work? Check the detail of your company's policy; many are "use it or lose it," meaning if you don't use the full amount in your FSA by year's end, that money will not roll over.

New federal laws permit employers to let their workers roll over a maximum of $500, but it's the employers choice whether or not to allow this rollover. Also, some employers give their workers a grace period until March of the following year to use the prior year funds, while other employers require that the funds are used by Dec 31. Check with your HR department to learn your employers' rules.

Remember that FSA funds can be used for a lot more than just prescriptions and co-pays. If you have money you need to spend before it's gone, you may also be able to use it for things like dental work, glasses or contact lenses, and even some qualified over-the-counter medicine and supplies.
Secure some additional tax deductions for 2014 by donating to a charitable cause. As long as you itemize your donations, you can claim everything from cash donations to goods to used vehicle donations. You can even give some of your stock to charity, thus avoiding capital gains tax.

Just be sure to get a signed and dated receipt from the charity, noting the amount of your contribution -- especially if you're donating goods instead of cash. As an added precaution, take photographs of any high-value donations (over $250).
You may qualify for another tax credit by making energy-efficient home improvements like windows, insulation and roofing. You'll also save more in the long run on your home's heating and cooling costs. To see which improvements qualify for a tax credit, go to the federal government's energy savings website, which lists comprehensive details that are broken down state-by-state.
If you need to enroll for coverage on the healthcare exchanges, you have until Dec. 15, 2014 to sign up for coverage that begins on Jan. 1, 2015. If you're already enrolled in a marketplace plan, you may be able to change your coverage if you've had a qualifying life event, such as a marriage or a move to another state.
You can give up to $14,000 to individuals per year without needing to file a gift tax return. If you're married, you and your spouse can each bequeath gifts of $14,000 to an individual without triggering a taxable event. If you decide to give a major financial gift to your children, talk to your kids first about strong money-management skills. Here's a free guide to help to talk to your kids about money.

Giving a little bit each year can also help reduce your overall estate tax burden (although the estate tax exemption is $5.34 million in 2014, which means few taxpayers will need to worry about this).

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