Obama ‘cliff’ remarks spark US stocks sell-off

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Traders work on the floor of the New York Stock Exchange November 7, 2012 in New York City. AFP FILE PHOTO

NEW YORK — US stocks tumbled Wednesday as President Barack Obama challenged Republicans to accept tax increases for the wealthy in a deal to avert the year-end fiscal cliff.

After opening higher, helped by Cisco Systems’s strong earnings, share prices slid and then turned more sharply downward after Obama laid out his terms for a deal in his first news conference since his re-election.

Wall Street stocks closed at their lowest level in more than four months after Obama drew a hard line against Republicans in the battle for a compromise to avoid automatic spending cuts and tax increases that take effect in January.

“The president’s statements failed to inspire investor confidence, thus resulting in an afternoon sell-off,” said Briefing.com analysts.

The Dow Jones Industrial Average dropped 185.23 points (1.45 percent) to 12,570.95, its lowest close since June 26.

The broad-market S&P 500 lost 19.04 (1.39 percent) at 1,355.49, while the tech-rich Nasdaq Composite gave up 37.08 (1.29 percent) at 2,846.81.

Bank of America led the Dow rout, sliding 3.6 percent, followed by General Electric, down 3.2 percent.

Dow component Cisco was the sole blue-chip gainer, jumping 4.8 percent after its 48 cents earnings per share for the fiscal first quarter beat analyst expectations by two cents.

Abercrombie & Fitch, the retailer of trendy clothing for youth, soared 34.5 percent after turning in a 40 percent jump in third-quarter profit and sharply increasing its forecasts for the full year.

Office supplies chain Staples added 2.6 percent after reporting an expected quarterly loss due to impairment charges mainly related to its struggling European business.

Excluding that, its earnings per share came in flat, and around analyst expectations.

On the Nasdaq, Dell added 1.9 percent and Facebook gained 12.6 percent, despite a lifting of a share-sale ban for insiders, while Apple fell 1.1 percent.

Starbucks dropped 2.9 percent after announcing it would buy tea chain Teavana for $620 million.

Bond prices were mixed.

The 10-year US Treasury yield was unchanged from Tuesday at 1.59 percent, and the 30-year rose to 2.73 percent from 2.72 percent.

Bond prices and yields move inversely.

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  • Pitbulldog

    A leader who uses his mouth to do the thinking, not his brains to think first before he talks.  Shades of a stateside P-noy.  Parehong pulpol.

  • nennen12345

    yeah, see Obama won and what happen, the stocks are down everyday because investors have no trust and confidence in him.  his kind of government is crazy. the rich are the ones giving jobs to people.  they pay a lot for their employees like insurance, retirement benefits and other incentives but if obama will tax them high, the business owners will lay off their people.  private sectors make the economy growing and it’s not the government.  how can people pay their taxes if no jobs available.  then what the government will do, borrow money from china to sustain its needs and the american debt will reach to trillions and trillions of dollars.  oh my, what will happen to this country in 4 years time.  hope not like Greece.

    • http://profiles.yahoo.com/u/LSC6LC55H5VT4O7223VVC7XD7A Maurice

      It’s not fair that the Rich get richer while the Poor get poorer.
      President Obama wants to increase the taxes on rich people. Believe me, they have enough money to handle that.

      • Pitbulldog

        That’s the desperate logic of sore losers.  Obama’s stupid leftist logic.  I will not say lazies, but people who have lost that will to fight and strive to improve their lives.  Do you think that by taxing the rich more will solve Obama’s problems?  Won’t these same rich people try to recover what they lost in taxes?  Increased prices, take their business outside USA, etc.  America is a capitalist state.  If you persevere and utilize your brains and talent to good use, you will prosper. But for a government who espouses socialist policies, surely that is not business friendly at all.

      • Count du Fount de Cakes

        in simple terms, greedy people don’t agree with obama. :D

      • dabu

         I would say, hard working people don’t agree with Obama

      • Count du Fount de Cakes

        oh yes… they are hard working and primarily driven by greed. :D

      • Wazdog

        The world is full of greedy people whether in business or in labor unions. But it’s the businessmen who create jobs. The leftists are the ones destroying them.

        Obama has created an environment where success is demonized and the mediocrity is exalted. Instead of pulling down the rich, he should be pulling up the poor and the middle class. His policies and rhetoric are not only anti-business but ultimately anti-America which includes the middle class he seeks to protect.

      • Count du Fount de Cakes

        oh yes that’s true. I wont refute any of that…. but still, greedy people don’t agree with Obama. :D

      • nennen12345

        you are exactly right!  the news this morning there are 439,000 of americans out of jobs again in just one week after his re-election. i wonder, how many of these people voted for obama just for him to stay in power and yet today they are out of jobs.

        just like the victims of the hurricane sandy in new york, new jersey, virginia and others. they are complaining of so many things that they are not being helped out that they have no food, no power, no gas and yet obama won the election in these states.  my heart goes out to these victims but how come they voted for obama if they are not satisfied of the government’s service? 

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