Monday, it was the Nasdaq's turn to bask in the spotlight. After the Dow and the S&P 500 topped key levels last week, the Nasdaq moved above 4,000 for the first time in 13 years. But like the other indexes, its rally ran out of steam near the close. And despite big gains over the past few years, the Nasdaq is still 21 percent below its Internet bubble peak.
The Dow Jones industrial average (^DJI) gained 8 points, but the Standard & Poor's 500 index (^GPSC) fell 2, while Nasdaq composite index (^IXIC) added 3 points, closing at 3994. The Nasdaq is primarily known for its heavy load of tech stocks, but biotechs led the way Monday.
DaVita (DVA) Healthcare jumped 9 percent and Fresenius Medical (FMS) rose 7 percent after the government said it would not cut kidney dialysis payments be nearly as much as expected. ARIAD Pharmaceuticals (ARIA) soared 36 percent. The stock has been on a wild ride over the past month -- ever since the FDA issued a warning about serious side effects tied to its cancer drug. And Orexigen (OREX) jumped 9 percent. The company reported that its weight loss drug performed well in a trial of 10-thousand patients. The company says the test achieved its goal and it will resubmit an application to the FDA.
Among the big tech stocks on the Nasdaq, Apple (AAPL) and Amazon (AMZN) both gained about 1 percent, but social media stocks are getting hit. Facebook lost 3 percent, Yelp dropped nearly 7 percent, and Twitter fell 4.5 percent. Twitter is back below $40 a share, and near its IPO price.
Among the Dow stocks, Caterpillar (CAT) gained 2 percent as Bank of America/Merrill Lynch upgraded the stock to a 'buy.' But Boeing (BA) fell 2 percent after issuing a safety warning about engines made by General Electric (GE) for the 787 Dreamliner and other models.
Walmart (WMT) edged higher after saying its CEO is retiring. He'll be succeeded by the head of the company's international division.
Finally, in a classic case of buy on the rumor, sell on the news, shares of Lions Gate (LGF) slid 10 percent even though its "Hunger Games" sequel turned into a blockbuster in its first weekend in the theaters.
What to Watch Tuesday:
The Commerce Department releases third-quarter gross domestic product at 8:30 a.m. Eastern time.
Standard & Poor's releases S&P/Case-Shiller index of home prices for September and the third quarter at 9 a.m.
The Conference Board releases the Consumer Confidence Index for November at 10 a.m.
These major companies are due to report quarterly corporate earnings:
After Market: Biotechs Boost Nasdaq to Milestone 4,000 Mark - Briefly
Usually, if borrowers have part of their debt written off or forgiven, they have to treat that amount as taxable income. But in the aftermath of the housing market's implosion, homeowners who defaulted on their mortgages and had their bank write off or forgive part or all of their loans weren't required to claim the forgiven amount as income. The Mortgage Forgiveness Debt Relief Act of 2007, which created this provision, has been extended before, but now, with home prices recovering somewhat, the incentive to preserve this provision is starting to fade. That makes it more likely that the mortgage-debt forgiveness provisions might not get renewed for 2014.
Federal tax law has allowed taxpayers to deduct state and local income taxes for years, but for the 57 million people who live in states that don't charge income tax, those provisions didn't provide any relief. That changed in 2004, when lawmakers allowed taxpayers to choose instead to take a similar deduction for sales taxes. The provision, which was originally slated to expire at the end of 2007, has been repeatedly extended by Congress. Over the years, it has provided $16.4 billion in deductions to affected taxpayers.
Teachers from kindergarten to high school are allowed to deduct up to $250 for money they spend buying supplies for their classrooms. This deduction's available even to those who don't itemize, making it more valuable than most deductions. According to figures from The Tax Institute at H&R Block, more than 3.6 million teachers took advantage of this provision in 2010 to deduct $915 million in expenses. This deduction has been extended regularly ever since its initially scheduled expiration in 2005, so, even though it's on the chopping block again, it's a pretty good bet that lawmakers will let the tax break survive into 2014.
These provisions allow certain taxpayers to deduct between $2,000 and $4,000 of qualified educational costs. This provision was also retroactively reinstated for 2012 at the beginning of this year. The difference, though, is that other tax breaks also exist for educational expenses, including the Lifetime Learning Credit and the American Opportunity Credit. (You have to pick either the tuition and fees deduction, or one of the two education credits. You're not allowed to double-dip.) Those tax credits makes it less crucial to extend the tuition deduction, although it's still a better deal for many people: The Tax Institute at H&R Block says that 2 million taxpayers used it to write off $4.36 billion in expenses in 2010.
Since 2006, taxpayers could claim a credit on certain expenses for remodeling their homes to make them more energy efficient. Currently, the maximum lifetime credit amount is $500, but amounts were higher in the past, and more than 43.5 million taxpayers have claimed an average of more than $765 using the credit.
Congress commonly waits until late in the year to extend expiring tax provisions like these, as well as others not mentioned above, such as the exemption for charitable IRA distributions, deductions for mortgage insurance premiums, and the higher immediate write-off amounts for small-business equipment purchases.
Lawmakers often use what's known as a tax-extenders bill to pass all the extensions in a single package. Earlier this month, WOTC Coalition President Paul Suplizio said that a seemingly unrelated Medicare-payments bill was probably the first step toward a year-end tax extenders bill that would cover expiring tax breaks like these.
And, just as millions of Americans procrastinate until April 15 to file their taxes, we can expect lawmakers to wait until Dec. 31 -- or beyond -- to decide the fate of these tax breaks.