Stock markets plunge again
The S&P 500 slid to its lowest level since late July on Wednesday, driven by uncertainty over U.S. budget negotiations and an escalation of violence in the Middle East.
Industrial shares led the decline, dragged lower in part by a 1 percent spike in crude prices after the Israeli offensive on Gaza.
Wall Street had opened higher after Dow component Cisco Systems reported first-quarter earnings and revenue late Tuesday that beat expectations, driving its stock up 4.8 percent to $17.66. The positive momentum was short-lived.
The Dow Jones industrial average fell 185.23 points, or 1.45 percent, to 12,570.95 at the close on Wednesday. The S&P 500 dropped 19.04 points, or 1.39 percent, to 1,355.49. The Nasdaq composite lost 37.08 points, or 1.29 percent, to 2,846.81.
Both the Dow industrials and the Nasdaq ended at their lowest levels since late June.
President Obama, in his first news conference since re-election, held to his position that marginal tax rates will have to rise to tackle the nation's deficits. With talks over solving the “fiscal cliff” in early stages, investors are reacting to the uncertainty by shedding positions.
“I think we will have a last-minute cliffhanger solution,” said Michael Cheah, portfolio manager at SunAmerica Asset Management in Jersey City, N.J., about a deal to avoid the cliff.
“In the meantime, the market is going to get punched every day.”
Without a deal, a series of mandated tax hikes and spending cuts will start to take effect early next year that could push the economy into a recession.
Taxes on capital gains and dividends could rise as part of the negotiations, pushing investors to sell this year and pay lower taxes on their gains.
“We know Europe's in trouble, China's slowing down ... and now you've got the Middle East flaring up again. It's all hitting at once, and obviously, the market is taking a ‘sell first, ask questions later' approach,” said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati.
The S&P 500 closed below its 200-day moving average for a fifth day in a row, a technical indicator that suggests recent declines are gaining momentum. It was the benchmark S&P 500's lowest close since July 25.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Pittsburgh region’s philanthropic sector at top of nation’s pack
- Film session: Long shots dotted Steelers’ passing game
- Islamic immigration in Europe
- Police encryption
- Enough Benghazi
- Dorfman: Barnes & Noble could beat bookstore blues, chief’s stock buy suggests
- In a heartbeat: ‘Kissing bug’ showing up in Pa.
- Fed slashes its emergency power options in crisis
- Distractions can help keep riders alert in self-driving cars, study finds
- Roundup: Locked out ATI workers to lose company-paid health benefits; more
- Starkey: Tomlin lived in his fears