US investors are uncertain which way to turn after optimism about the country's forthcoming spending cuts was tempered by poor industrial production figures.
A report in the Wall Street Journal that officials could take a more flexible approach to the fiscal cliff - next year's tax rises and spending cuts - looked as if it would give markets an early lift. The White House was said to be in advanced talks to replace the proposed $100bn of spending cuts with a new package of smaller, more targeted reductions.
President Obama and Congress are due to begin talks about the fiscal cliff, with most analysts expecting a long drawn out progress, so the report was seen as a positive prospect.
But the shine was taken off by news that US industrial production fell by 0.4% in October, with hurricane Sandy again taking some of the blame. The Federal Reserve estimated that Sandy had knocked around 1% off production in all.
Annalisa Piazza at Newedge Strategy said:
The picture for US industrial production is not too encouraging at the start of the third quarter. Although part of the October decline might be due to one-off factors, we rule out a sharp acceleration will follow in the coming months. Indeed, business confidence indicators remain mixed, showing no momentum for the US industrial sector.
So at the moment the Dow Jones Industrial Average is down around 17 points.
