Stocks Slump on Fiscal Cliff Worries
U.S. stocks have been hammered in mid-day trading as growing fears over ‘fiscal cliff’ and deteriorating economic environment of euro zone economy along with resurface of debt crisis in Greece badly hurt the risk appetite.
Losses were seen across the board with both energy and financial stocks losing the most.
At around 12 p.m. EST, the Dow Jones Industrial Average Index plunged 2.36%; the Nasdaq Composite Index lost 2.31 % while the S&P 500 Index slumped 2.26%.
On Wednesday heavy equity sell-off was seen as investors fretted over the looming threat of ‘fiscal cliff’, which is automatic spending cuts and increase in taxes estimated at $600 billion, if the Congress fails to build a consensus over shrinking the fiscal deficit by the year end. Earlier today credit rating agency Fitch asked President Obama to take urgent steps that could prevent the start of the ‘fiscal cliff’. The agency also warned that U.S. credit rating could face a possible downgrade in 2013 if urgent remedial actions were not taken by the congress with regard to fiscal deficit.
Elsewhere in Europe, all leading benchmark indexes ended in red territory as market sentiment was weighed by possible threat of ‘fiscal cliff’ and worsening economic situation in the euro zone. Earlier today, the European Central Bank, President Mario Draghi said that economic activities in the euro zone was expected to remain weak and the impact of the slowdown was now hurting the German economy—which is regarded as the growth engine of Europe.
In Greece, the newly elected Parliament is expected to vote on new package of austerity measures. If the measures are disapproved by the majority of parliamentarians then the next round of bailout fund/ financial aid installment worth $40.2 billion will be blocked.
On earnings front, retail chain, Macy’s (NYSE: M) reported better than expected quarterly thanks to rising sales. The Company also upwardly revised its full-year outlook.
After the closing bell ring, Qualcomm (NASDAQ: QCOM), CBS (NYSE: CBS) and Activision Blizzard (NASDAQ: ATVI) are expected to report quarterly earnings.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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