Wall Street edges down after recent rally; retailers weigh

NEW YORK (Reuters) - Wall Street slipped on Monday, pulling back from last week's gains, as retailers fell on concerns about heavy discounts at the start of the U.S. holiday shopping season and the overhang of the "fiscal cliff" kept investors wary of making big bets.

The Nasdaq outperformed to close higher, led by gains in eBay and as Apple continued its bounce back.

The Standard & Poor's 500 cut most of its losses during the session and managed to stay above the psychologically important 1,400 level. It also remained above the 200-day moving average, maintaining its long-term uptrend.

The S&P 500 consumer discretionary index <.gspd> fell 0.5 percent after the start of the holiday shopping season over the four-day Thanksgiving weekend. Target , one of the largest retailers by market value, fell 2.6 percent.

"The concern is big retailers are discounting so much, sales look better, but at what cost?" said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore.

Bucking the retail trend, shares of eBay closed at their highest in almost eight years, rising 4.9 percent to $51.40, as the online marketplace notched strong sales on "Cyber Monday." Amazon gained 1.6 percent to $243.62.

The White House threw cold water on a proposal of avoiding the looming "fiscal cliff" of spending cuts and tax highs by limiting tax deductions and loopholes, instead of allowing tax rates to rise for the richest Americans.

Investors are hoping for advances in talks over the $600 billion in spending cuts and tax hikes scheduled to begin next year, which threaten to drag the U.S. economy back into recession.

Indications of progress in talks, or just political willingness to negotiate, contributed to the market's recent rally. Major indexes last week gained 3 to 4 percent, with the Dow above 13,000 and the S&P above 1,400 for the first time since November 6.

Those gains represented a turnaround from recent losses founded on worries about Washington's ability to solve budgetary problems.

The Dow Jones industrial average <.dji> fell 42.31 points, or 0.33 percent, to 12,967.37. The S&P 500 <.spx> dropped 2.86 points, or 0.20 percent, to 1,406.29. The Nasdaq Composite <.ixic> gained 9.93 points, or 0.33 percent, to 2,976.78.

About 5.2 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the daily average so far this year of about 6.49 billion shares.

On the NYSE, roughly 13 issues fell for every 10 that rose, and on Nasdaq nearly six rose for every five that fell.

In the other major worry for the market, euro zone finance ministers and the International Monetary Fund made their third attempt in as many weeks to agree on releasing emergency aid for Greece, with policymakers saying a write-down of Greek debt is off the table for now.

"There's no catalyst to continue the rally we saw last week, though Greece would have been important if we weren't dealing with the fiscal cliff," Stifel Nicolaus' Mata said.

Shares of Knight Capital Group Inc jumped 13.3 percent to $2.82 following reports that rivals might be preparing to bid for part or all of the trading firm.

Apple Inc has asked a federal court to add six more products to its patent infringement lawsuit against Samsung Electronics , including the Samsung Galaxy Note II, in the latest move in an ongoing legal war between the two companies. Apple shares were up 3.2 percent at $589.53.

(Reporting by Rodrigo Campos; Editing by Leslie Adler)

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Egypt’s President Said to Limit Scope of Judicial Decree

Tara Todras-Whitehill for The New York Times

Egyptians stand near a burned out school, before the funeral of Mohammed Gaber Salah, an activist who died Sunday from injuries sustained during protests.

CAIRO — President Mohamed Morsi agreed on Monday to limit the scope of a sweeping decree he had issued last week that raised his edicts above any judicial review, according to a report by a television network allied with his party. The agreement, reached with top judicial authorities, would leave most of Mr. Morsi’s actions subject to review by the courts, but it appears to preserve a crucial power: protecting the country’s constitutional council from being dissolved by the courts before it finishes its work.

The agreement was announced by a spokesman for the president; as of Monday night it had not yet been confirmed by the judges.

The Muslim Brotherhood, the Islamist group that sponsored Mr. Morsi and his party, announced that it was canceling a major demonstration in support of the president that had been planned for Tuesday.

Mr. Morsi’s deal with the judges follows four days of rising tensions and flashes of violence across the country set off by his decree, which removed the last check on his power to rule Egypt.

Mr. Morsi said he was forced to issue the decree in order to protect the constitutional assembly from the courts, which had shuttered Egypt’s first freely elected parliament and disbanded an earlier constituent assembly, both dominated by Mr. Morsi’s Islamist allies. But the scope of the new powers claimed by the president galvanized his political opposition. Vandals attacked more than a dozen offices of his political party, and thousands of people demonstrated in the streets to vent their fears of a new autocracy in a country that had just shaken one off.

The agreement announced on Monday could be a watershed moment for Egypt’s new order: a triumph of respect for the rule of law and the independence of the courts, and a demonstration that Egypt’s new leaders are capable of the kind of compromise in the national interest that often eludes the party leaders in even the most practiced democracies.

But opponents appeared set to hold out for a further withdrawal of presidential authority, as well as the immediate dissolution of the constitutional assembly. Speaking at a press conference while Mr. Morsi was meeting with the judges, the opposition activist and intellectual Abdel Haleem Qandeil called for “a long-term battle,” declaring that the limiting of the decree should only be the first step toward the opposition’s goal of “the withdrawal of the legitimacy of Morsi’s presence in the presidential palace.”

Mr. Morsi’s advisers emphasized on Monday that they had not altered the decree’s language, and they portrayed the agreement with the judges as merely an explanation of the president’s original intent, rather than any pullback.

But the statement Mr. Morsi issued last Thursday to claim his broader powers had explicitly exempted all his future edicts from judicial oversight until a new constitution is ratified, and in recent days Mr. Morsi’s justice minister, Ahmed Mekki, publicly criticized the wording of the decree as over-broad; he argued that the president should add a phrase restricting its application only to presidential edicts related to the constitutional assembly and certain other matters.

Some of the ramifications of the deal remain unclear. Mr. Morsi and the judges of the Supreme Judicial Council agreed to limit the scope of the president’s immunity from judicial review to matters known in Egypt as acts of sovereignty. That is an established formulation in Egyptian law, so interpreting the decree that way meant he would not be claiming new immunity.

By accepting that interpretation, Mr. Morsi in effect pulled back from the aspects of his decree that aroused alarm about a power grab.

Still, the deal appeared to give Mr. Morsi the power he said he had deemed most essential: to protect the constitutional assembly so that it can stay in business long enough to finish a charter and end Egypt’s tortured transition after the overthrow of its former strongman, Hosni Mubarak.

Cracks appeared in Mr. Morsi’s government on Sunday over the decree. At least three other senior advisers resigned over the measure, and the move had also prompted widening street protests and cries from opponents that Mr. Morsi, who already governs without a legislature, was moving toward a new autocracy in Egypt, less than two years after the ouster of the strongman Hosni Mubarak.

With a threatened strike by the nation’s judges, a plunge in the country’s stock market and more street protests looming, Mr. Morsi’s administration initially sent mixed messages on Sunday over whether it was willing to consider a compromise: a spokesman for the president’s party insisted that there would be no change in his edict, but a statement from the party indicated for the first time a willingness to give political opponents “guarantees against monopolizing the fateful decisions of the homeland in the absence of the Parliament.”

Mayy El Sheikh and Mai Ayyad contributed reporting.

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Nokia imaging chief to quit

HELSINKI (Reuters) – Nokia‘s long-time imaging chief Damian Dinning has decided to leave the loss-making cellphone maker at the end of this month, the company said in a statement.

The strong imaging capabilities of the new Lumia smartphone models are a key sales argument for the former market leader, which has been burning through cash while losing share in both high-end smartphones and cheaper handsets.

Nokia’s Chief Executive Stephen Elop has replaced most of the top management since he joined in late 2010 and Dinnig is the latest of several executives to leave.

Dinning did not want to move to Finland as part of the phonemakers’ effort to concentrate operations and will join Jaguar Land Rover to head innovations in the field of connected cars, he said on Nokia’s imaging fan site PureViewclub.com.

(Reporting By Tarmo Virki, editing by William Hardy)

Tech News Headlines – Yahoo! News

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Tom Cruise Films Helicopter Scene in Empty Trafalgar Square

11/25/2012 at 05:15 PM EST

Tom Cruise in Trafalgar Square

FameFlynet

Back to work!

After spending Thanksgiving with daughter Suri, 6, Tom Cruise filmed scenes for the sci-fi action film All You Need Is Kill in London on Sunday.

The actor, who plays alien fighter Lt. Col. Bill Cage, landed in a helicopter in the middle of the usually bustling Trafalgar Square, which was shut down for the scene, in the heart of London.

Based on Hiroshi Sakurazaka's novel, the movie follows Cage as he battles the Mimics, a violent race of alien invaders, while stuck in a time loop.

Emily Blunt also stars in the film as Special Forces fighter Rita Vrataski, who according to Deadline.com, has destroyed more Mimics than anyone else on earth.

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AP PHOTOS: Simple surgery heals blind Indonesians

PADANG SIDEMPUAN, Indonesia (AP) — They came from the remotest parts of Indonesia, taking crowded overnight ferries and riding for hours in cars or buses — all in the hope that a simple, and free, surgical procedure would restore their eyesight.

Many patients were elderly and needed help to reach two hospitals in Sumatra where mass eye camps were held earlier this month by Nepalese surgeon Dr. Sanduk Ruit. During eight days, more than 1,400 cataracts were removed.

The patients camped out, sleeping side-by-side on military cots, eating donated food while fire trucks supplied water for showers and toilets. Many who had given up hope of seeing again left smiling after their bandages were removed.

"I've been blind for three years, and it's really bad," said Arlita Tobing, 65, whose sight was restored after the surgery. "I worked on someone's farm, but I couldn't work anymore."

Indonesia has one of the highest rates of blindness in the world, making it a target country for Ruit who travels throughout the developing world holding free mass eye camps while training doctors to perform the simple, stitch-free procedure he pioneered. He often visits hard-to-reach remote areas where health care is scarce and patients are poor. He believes that by teaching doctors how to perform his method of cataract removal, the rate of blindness can be reduced worldwide.

Cataracts are the leading cause of blindness globally, affecting about 20 million people who mostly live in poor countries, according to the World Health Organization.

"We get only one life, and that life is very short. I am blessed by God to have this opportunity," said Ruit, who runs the Tilganga Eye Center in Katmandu, Nepal. "The most important of that is training, taking the idea to other people."

During the recent camps, Ruit trained six doctors from Indonesia, Thailand and Singapore.

Here, in images, are scenes from the mobile eye camps:

Read More..

Wall Street Week Ahead: Political wrangling to pinch market's nerves

NEW YORK (Reuters) - Volatility is the name of this game.

With the S&P 500 above 1,400 after five days of gains, traders will be hard pressed not to cash in on the advance at the first sign of trouble during negotiations over tax hikes and spending cuts that resume next week in Washington.

President Barack Obama and U.S. congressional leaders are expected to discuss ways to reduce the budget deficit and avoid the "fiscal cliff" of automatic tax increases and spending cuts in 2013 that could tip the economy into recession.

As politicians make their case, markets could react with wild swings.

The CBOE Volatility Index <.vix>, known as the VIX, Wall Street's favorite barometer of market anxiety that usually moves in an inverse relationship with the S&P 500, is in a long-term decline with its 200-day moving average at its lowest in five years. But the VIX could spike if dealings in Washington begin to stall.

"If the fiscal cliff happens, a lot of major assets will be down on a short-term basis because of the fear factor and the chaos factor," said Yu-Dee Chang, chief trader and sole principal of ACE Investments in Virginia.

"So whatever you are in, you're going to lose some money unless you go long the VIX and short the market. The 'upside risk' there is some kind of grand bargain, and then the market goes crazy."

He set the chances of the economy going over the cliff at only about 5 percent.

Many in the market agree there will be some sort of agreement that will fuel a rally, but the road there will be full of political landmines as Democrats and Republicans dig in on positions defended during the recent election.

Liberals want tax increases on the wealthiest Americans while protecting progressive advances in healthcare, while conservatives make a case for deep cuts in programs for the poor and a widening of the tax base to raise revenues without lifting tax rates.

"Both parties will raise the stakes and the pressure on the opposing side, so the market is going to feel much more concerned," said Tim Leach, chief investment officer of U.S. Bank Wealth Management in San Francisco.

"The administration feels really confident at this point, or a little more than the Republican side of Congress may feel," he said. "But it's still a balanced-power Congress so neither side can feel that they can act with impunity."

THE MIDDLE EAST AND EUROPE

Tension in the Middle East and unresolved talks in Europe over aid for Greece could add to the uncertainty and volatility on Wall Street could surge, analysts say.

An Egypt-brokered ceasefire between Israel and Hamas came into force late on Wednesday after a week of conflict, but it was broken with the shooting of a Palestinian man by Israeli soldiers, according to Palestine's foreign minister.

Buoyed by accolades from around the world for mediating the truce, Egyptian President Mohamed Mursi assumed sweeping powers, angering his opponents and prompting violent clashes in central Cairo and other cities on Friday.

"Those kinds of potential large-scale conflicts can certainly overwhelm some of the fundamental data here at home," said U.S. Bank's Leach.

"We are trying to keep in mind the idea that there are a lot of factors that are probably going to contribute to higher volatility."

On a brighter note for markets, Greece's finance minister said the International Monetary Fund has relaxed its debt-cutting target for Greece and a gap of only $13 billion remains to be filled for a vital aid installment to be paid.

Still, a deal has not been struck, and Greece is increasingly frustrated at its lenders, still squabbling over a deal to unlock fresh aid even though Athens has pushed through unpopular austerity cuts.

HOUSING DATA COULD CONFIRM RECOVERY

This week is heavy on economic data, especially on the housing front. Some of the numbers have been affected by Superstorm Sandy, which hit the U.S. East Coast more than three weeks ago, killing more than 100 people in the United States alone and leaving billions of dollars in damages.

The housing data, though, could continue to confirm a rebound in the sector that is seen as a necessary step to unlock spending and lower the stubbornly high unemployment rate.

Tuesday's S&P/Case-Shiller home price index for September is expected to show the eighth straight month of increases, extending the longest continuous string of gains since prices were boosted by a homebuyer tax credit in 2009 and 2010.

New home sales for October, due on Wednesday, and October pending home sales data, due on Thursday, are also expected to show a stronger housing market.

Other data highlights this week include durable goods orders for October and consumer confidence for November on Tuesday and the Chicago Purchasing Managers Index on Friday.

At Friday's close, the S&P 500 wrapped up its second-best week of the year with a 3.6 percent gain. Encouraging economic data this week could confirm that regardless of the ups and downs that the fiscal cliff could bring, the market's fundamentals are solid.

For the year, the benchmark Standard & Poor's 500 Index <.spx> is up 12.1 percent.

In Friday's post-Thanksgiving rally, the Dow Jones industrial average <.dji> jumped nearly 173 points to close back above 13,000 - putting the Dow up 6.5 percent for the year. The Nasdaq Composite Index <.ixic> is up 13.9 percent for 2012.

Jeff Morris, head of U.S. equities at Standard Life Investments in Boston, said that "it's kind of noise here" in terms of whether the market has spent "a few days up or down. It has made some solid gains over the course of the year as the housing recovery has come into view, and that's what's underpinning the market at these levels.

"I would caution against reading too much into the next few days."

(Wall St Week Ahead runs every Sunday. Questions or comments on this column can be emailed to: rodrigo.campos(at)thomsonreuters.com)

(Reporting by Rodrigo Campos; Editing by Tim Dobbyn and Jan Paschal)

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Bangladesh Fire Kills More Than 100 and Injures Many

MUMBAI — More than 100 people died Saturday and Sunday in a fire at a garment factory outside Dhaka, Bangladesh, in one of the worst industrial tragedies in that country.

It took firefighters all night to put out the blaze at the factory, Tazreen Fashions, after it started about 7 p.m. on Saturday, a retired fire official said by telephone from Dhaka, the capital. At least 111 people were killed, and scores of workers were taken to hospitals for treatment of burns and smoke inhalation.

“The main difficulty was to put out the fire; the sufficient approach road was not there,” said the retired official, Salim Nawaj Bhuiyan, who now runs a fire safety company in Dhaka. “The fire service had to take great trouble to approach the factory.”

Bangladesh’s garment industry, the second-largest exporter of clothing after China, has a notoriously poor fire safety record. Since 2006, more than 500 Bangladeshi workers have died in factory fires, according to Clean Clothes Campaign, an antisweatshop advocacy group in Amsterdam. Experts say many of the fires could have been easily avoided if the factories had taken the right precautions. Many factories are in cramped neighborhoods and have too few fire escapes, and they widely flout safety measures. The industry employs more than three million workers in Bangladesh, most of them women.

Activists say that global clothing brands like Tommy Hilfiger and the Gap and those sold by Walmart need to take responsibility for the working conditions in Bangladeshi factories that produce their clothes.

“These brands have known for years that many of the factories they choose to work with are death traps,” Ineke Zeldenrust, the international coordinator for the Clean Clothes Campaign, said in a statement. “Their failure to take action amounts to criminal negligence.”

The fire at the Tazreen factory in Savar, northwest of Dhaka, started in a warehouse on the ground floor that was used to store yarn, and quickly spread to the upper floors. The building was nine stories high, with the top three floors under construction, according to an garment industry official at the scene who asked not to be named because he was not authorized to speak to the news media. Though most workers had left for the day when the fire started, the industry official said as many as 600 workers were still inside working overtime.

The factory, which opened in May 2010, employed about 1,500 workers and had sales of $35 million a year, according to a document on the company’s Web site. It made T-shirts, polo shirts and fleece jackets.

Most of the workers who died were on the first and second floors, fire officials said, and were killed because there were not enough exits. None of them opened to the outside.

“The factory had three staircases, and all of them were down through the ground floor,” said Maj. Mohammad Mahbub, the operations director for the Fire Department, according to The Associated Press. “So the workers could not come out when the fire engulfed the building.”

In a telephone interview later on Sunday, Major Mahbub said the fire could have been caused by an electrical fault or by a spark from a cigarette.

In a brief phone call, Delowar Hossain, the managing director of the Tuba Group, the parent company of Tarzeen Fashions, said he was too busy to comment. “Pray for me,” he said and then hung up.

Television news reports showed badly burned bodies lined up on the floor in what appeared to be a government building. The injured were being treated in hallways of local hospitals, according to the reports.

The industry official said that many of the bodies were burned beyond recognition and that it would take some time to identify them.

One survivor, Mohammad Raju, 22, who worked on the fifth floor, said he escaped by climbing out of a third-floor window onto the bamboo scaffolding that was being used by construction workers. He said he lost his mother, who also worked on the fifth floor, when they were making their way down.

“It was crowded on the stairs as all the workers were trying to come out from the factory,” Mr. Raju said. “There was no power supply; it was dark, and I lost my mother in dark. I tried to search for her for 10 to 15 minutes but did not find her.”

A document posted on Tarzeen Fashions’ Web site indicated that an “ethical sourcing” official for Walmart had flagged “violations and/or conditions which were deemed to be high risk” at the factory in May 2011, though it did not specify the nature of the infractions. The notice said that the factory had been given an “orange” grade and that any factories given three such assessments in two years from their last audit would not receive any Walmart orders for a year.

It was unclear whether Walmart had suspended the company or was still buying clothes from it. The Web sites of Tuba Group lists the retailer and others like Carrefour, a French retail chain, as customers. A spokesman for Walmart, Kevin Gardner, said the company was “so far unable to confirm that Tazreen is supplier to Walmart nor if the document referenced in the article is in fact from Walmart.”

Bangladesh exports about $18 billion worth of garments a year. Employees in the country’s factories are among the lowest-paid in the world, with entry-level workers making a government-mandated minimum wage of about $37 a month.

Tensions have been running high between workers, who have been demanding an increase in minimum wages, and the factory owners and government. A union organizer, Aminul Islam, who campaigned for better working conditions and higher wages, was found tortured and killed outside Dhaka this year.

Fire safety remains weak across much of South Asia. In September, nearly 300 workers were killed in a fire at a textile factory in Karachi, Pakistan, just weeks before it passed an inspection that covered several issues, including health and safety.

Julfikar Ali Manik contributed reporting from Dhaka, Bangladesh, and Stephanie Clifford from New York.

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Police mull action over false Twitter abuse claims

LONDON (Reuters) – Britons who posted remarks on Twitter and in blogs wrongly identifying a senior Conservative politician as a child sex abuser might face prosecution after police said on Wednesday they were looking to see if any crimes had been committed.

Lord Alistair McAlpine, an ally of former Prime Minister Margaret Thatcher, was widely named on social media sites as being the unidentified politician accused in a report by the BBC’s Newsnight program of abusing boys in social care.

McAlpine, who is 70 and in poor health, vigorously denied the claims and the abuse victim central to the BBC story later confirmed that the peer was not one of his attackers.

London’s Metropolitan Police said no criminal allegations had yet been made but that detectives would be meeting with McAlpine to begin assessing whether action should be taken.

Under the Malicious Communications Act, people can be prosecuted for sending any electronic communication or article which conveys a grossly offensive message or information which is false and believed to be false by the sender.

“It is far too early to say whether any criminal investigation will follow,” the police said in a statement.

The intervention comes as lawyers for McAlpine continued legal action against those who “sullied” his reputation.

The BBC has already agreed to pay 185,000 pounds ($ 294,400)over the Newsnight report, and his lawyers have also contacted ITV after a presenter on a chat show brandished a list of alleged abusers during an interview with Prime Minister David Cameron.

McAlpine has also threatened to go after Twitter users, and media reports said his legal team had identified up to 10,000 defamatory tweets.

Sally Bercow, flamboyant wife of Britain’s parliamentary speaker, the man who keeps lawmakers in order during debates, is one of those who could face legal action.

Other Twitter users have been asked to come forward, apologize and make a “sensible and modest” donation to charity as compensation, at a level yet to be decided.

“Given the large amount of information that continues to be disseminated, the band for which the charity payment will be settled shall be when Lord McAlpine has a full understanding of this material,” his lawyers said in a statement.

“The donation is intended for tweeters with fewer than 500 followers, but those with larger numbers of followers are still encouraged to identify themselves and offer their formal apologies at this stage.”

(Reporting by Michael Holden; editing by Steve Addison)

Internet News Headlines – Yahoo! News

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AP PHOTOS: Simple surgery heals blind Indonesians

PADANG SIDEMPUAN, Indonesia (AP) — They came from the remotest parts of Indonesia, taking crowded overnight ferries and riding for hours in cars or buses — all in the hope that a simple, and free, surgical procedure would restore their eyesight.

Many patients were elderly and needed help to reach two hospitals in Sumatra where mass eye camps were held earlier this month by Nepalese surgeon Dr. Sanduk Ruit. During eight days, more than 1,400 cataracts were removed.

The patients camped out, sleeping side-by-side on military cots, eating donated food while fire trucks supplied water for showers and toilets. Many who had given up hope of seeing again left smiling after their bandages were removed.

"I've been blind for three years, and it's really bad," said Arlita Tobing, 65, whose sight was restored after the surgery. "I worked on someone's farm, but I couldn't work anymore."

Indonesia has one of the highest rates of blindness in the world, making it a target country for Ruit who travels throughout the developing world holding free mass eye camps while training doctors to perform the simple, stitch-free procedure he pioneered. He often visits hard-to-reach remote areas where health care is scarce and patients are poor. He believes that by teaching doctors how to perform his method of cataract removal, the rate of blindness can be reduced worldwide.

Cataracts are the leading cause of blindness globally, affecting about 20 million people who mostly live in poor countries, according to the World Health Organization.

"We get only one life, and that life is very short. I am blessed by God to have this opportunity," said Ruit, who runs the Tilganga Eye Center in Katmandu, Nepal. "The most important of that is training, taking the idea to other people."

During the recent camps, Ruit trained six doctors from Indonesia, Thailand and Singapore.

Here, in images, are scenes from the mobile eye camps:

Read More..

Wall Street Week Ahead: Political wrangling to pinch market's nerves

NEW YORK (Reuters) - Volatility is the name of this game.

With the S&P 500 above 1,400 following five days of gains, traders will be hard pressed not to cash in on the advance at the first sign of trouble during negotiations over tax hikes and spending cuts that resume next week in Washington.

President Barack Obama and U.S. congressional leaders are expected to discuss ways to reduce the budget deficit and avoid the "fiscal cliff" of automatic tax increases and spending cuts in 2013 that could tip the economy into recession.

As politicians make their case, markets could react with wild swings.

The CBOE Volatility Index <.vix>, known as the VIX, Wall Street's favorite barometer of market anxiety that usually moves in an inverse relationship with the S&P 500, is in a long-term decline with its 200-day moving average at its lowest in five years. The VIX could spike if dealings in Washington begin to stall.

"If the fiscal cliff happens, a lot of major assets will be down on a short-term basis because of the fear factor and the chaos factor," said Yu-Dee Chang, chief trader and sole principal of ACE Investments in Virginia.

"So whatever you are in, you're going to lose some money unless you go long the VIX and short the market. The 'upside risk' there is some kind of grand bargain, and then the market goes crazy."

He set the chances of the economy going over the cliff at only about 5 percent.

Many in the market agree there will be some sort of agreement that will fuel a rally, but the road there will be full of political landmines as Democrats and Republicans dig in on positions defended during the recent election.

Liberals want tax increases on the wealthiest Americans while protecting progressive advances in healthcare, while conservatives make a case for deep cuts in programs for the poor and a widening of the tax base to raise revenues without lifting tax rates.

"Both parties will raise the stakes and the pressure on the opposing side, so the market is going to feel much more concerned," said Tim Leach, chief investment officer of U.S. Bank Wealth Management in San Francisco.

"The administration feels really confident at this point, or a little more than the Republican side of Congress may feel," he said. "But it's still a balanced-power Congress so neither side can feel that they can act with impunity."

THE MIDDLE EAST AND EUROPE

Tension in the Middle East and unresolved talks in Europe over aid for Greece could add to the uncertainty and volatility on Wall Street could surge, analysts say.

An Egypt-brokered ceasefire between Israel and Hamas came into force late on Wednesday after a week of conflict, but it was broken with the shooting of a Palestinian man by Israeli soldiers, according to Palestine's foreign minister.

Buoyed by accolades from around the world for mediating the truce, Egyptian President Mohamed Mursi assumed sweeping powers, angering his opponents and prompting violent clashes in central Cairo and other cities on Friday.

"Those kinds of potential large-scale conflicts can certainly overwhelm some of the fundamental data here at home," said U.S. Bank's Leach.

"We are trying to keep in mind the idea that there are a lot of factors that are probably going to contribute to higher volatility."

On a brighter note for markets, Greece's finance minister said the International Monetary Fund has relaxed its debt-cutting target for Greece and a gap of only $13 billion remains to be filled for a vital aid installment to be paid.

Still, a deal has not been struck, and Greece is increasingly frustrated at its lenders, still squabbling over a deal to unlock fresh aid even though Athens has pushed through unpopular austerity cuts.

HOUSING DATA COULD CONFIRM RECOVERY

Next week is heavy on economic data, especially on the housing front. Some of the numbers have been affected by Superstorm Sandy, which hit the U.S. East Coast more than three weeks ago, killing more than 100 people in the United States alone and leaving billions of dollars in damages.

The housing data, though, could continue to confirm a rebound in the sector that is seen as a necessary step to unlock spending and lower the stubbornly high unemployment rate.

Tuesday's S&P/Case-Shiller home price index for September is expected to show the eighth straight month of increases, extending the longest continuous string of gains since prices were boosted by a homebuyer tax credit in 2009 and 2010.

New home sales for October, due on Wednesday, and October pending home sales data, due on Thursday, are also expected to show a stronger housing market.

Other data highlights next week include durable goods orders for October and consumer confidence for November on Tuesday and the Chicago Purchasing Managers Index on Friday.

At Friday's close, the S&P 500 wrapped up its second-best week of the year with a 3.6 percent gain. Encouraging economic data next week could confirm that regardless of the ups and downs that the fiscal cliff could bring, the market's fundamentals are solid.

Jeff Morris, head of U.S. equities at Standard Life Investments in Boston, said that "it's kind of noise here" in terms of whether the market has spent "a few days up or down. It has made some solid gains over the course of the year as the housing recovery has come into view, and that's what's underpinning the market at these levels.

"I would caution against reading too much into the next few days."

(Wall St Week Ahead runs every Friday. Questions or comments on this column can be emailed to: rodrigo.campos(at)thomsonreuters.com)

(Reporting by Rodrigo Campos; Editing by Tim Dobbyn and Jan Paschal)

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