No All-Clear for Stocks From 'Fiscal Cliff' Deal

Piotr Powietrzynski | Photographer's Choice | Getty Images

The global rally continues. Stocks are up across the globe, but the truth is this is the continuation of a rally that began in mid-November: Germany at a five-year high; France, the U.K., Portugal, are Greece at 52-week highs. China market is closed, but Hong Kong stocks are also at a 1.5-year high.

The euro is rallying against the dollar and the yen; large gains in energy (coal in particular) and basic materials stocks.

The deal reached last night does nothing for the spending cuts side of the equation.

And if this unfolds like the debate last week, with no meaningful movement on debt reduction, most traders I talk to expect downgrades of U.S. debt by the end of the first quarter.

Taxes for the wealthy: While the highest tax bracket (at $450,000 for couples) was considerably higher than the $250,000 initially discussed (a positive), the wealthy will pay more than just the top tax bracket of 39.6 percent indicate. There's a 3.8 percent increase in the Medicare tax for those families making more than $250,000, and the phaseout of certain deductions for those making more than 250,000.

(Read More: Here's What's in the 'Fiscal Cliff' Deal)

Still, there are things to like in the deal:

1) it should be a marginal positive for consumer sentiment;

2) the dividend and capital gains tax cap of 20 percent for households in the top bracket, well below the most dire predictions, should also be a marginal positive for stocks; and

3) no change in the mortgage interest deduction. The old limit remains: capital gains of up to $500,000 for couples ($250,000 for individuals) on a home remains deductible.

However, this deal does not give an "all clear" to stocks. Consider:

1) Health-care stocks. Still a bit wobbly ... there is a "doc fix" that prevents declines in payments to doctors for Medicare, but the sequestration still looms, which would include a likely 2 percent cut to Medicare.

2) Retail stocks: Will the outperformance continue? Retail stocks have outperformed the S&P 500 since 2009. But the payroll tax increase of 2 percent will likely curb at least some consumer spending.

3) Luxury retailers: Will 2013 be better? I noted retailers outperformed, but that's not the case across the board with luxury: big names like Coach and Tiffany were DOWN in 2012, while Ralph Lauren and Nordstrom were up only nine percent and eight percent, respectively, partly because the "fiscal cliff," with higher taxes for the wealthy, loomed over then in 2012. Additional taxes (see above) will continue to weigh on them, but there was a better resolution for wealthy households than was initially expected (from $250,000 to $450,000 for those in the highest tax bracket).

4) Tax rebate delays: The season when tax rebates go out has shifted; many checks ($3,000 on average from the feds) will now likely not go out until mid-February rather than mid-January. This will also likely have an impact on consumer spending short-term; I've heard some say discretionary items like auto parts retailers or sporting goods might see some lag.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.