U.S. stocks close mixed after Obama releases budget

08:17, February 15, 2011      

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U.S. stocks closed mixed on Monday as investors were digesting the government's budget proposal for fiscal 2012.

U.S. President Barack Obama proposed a budget on Monday, according to which the deficit for the current year will increase to 1.65 trillion dollars, a level equal to nearly 11 percent of the gross domestic product, making it the largest shortfall since the end of World War II.

According to the budget, the deficit is expected to decline sharply to 1.1 trillion dollars in the year of 2012.

Of the 1.1 trillion dollars in deficit savings that Obama is projecting over the next 10 years, two-thirds would come from spending cuts and one-third would come from tax increases. Obama also proposed raising taxes on energy companies.

Some investors believed that slashing spending might imperil the economic recovery, while some other investors worried that the debt crisis will become a big challenge to the U.S. economy.

Investors were now keeping a close watch on education, clean energy and high-speed rail sectors, because the government will increase spending in these areas which Obama considered as priorities.

Meanwhile, the Dow was boosted by energy stocks, because the price of benchmark crude fell to its lowest level in 12 weeks Monday as oil traders weighed growing U.S. oil supplies against unrest in the Middle East.

China's trade surplus fell to its lowest level in nine months in January as imports increased. The reading would help promote Asian markets, boost European commodity stocks and potentially send U.S. natural resource shares higher.

Stocks ended last week with a moderate gain after the resignation of Egyptian president Hosni Mubarak. The Dow rose to its highest close since June 2008.

The Dow Jones industrial average dropped 5.07 points, or 0.04 percent, to 12,268.19. The Standard & Poor's 500 Index was up 3.17 points, or 0.24 percent, to 1,332.32. The Nasdaq gained 7.74 points, or 0.28 percent, to 2,817.18.

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