Obama ‘cliff’ remarks spark US stocks sell-off

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.