By: JeeYeon Park
Stocks
took a sharp nosedive in a post-election selloff Wednesday, with the
Dow logging its biggest decline in nearly a year, prompted by concerns
over the looming "fiscal cliff" and amid renewed worries over Europe's
weak economy.
The Dow closed below 13,000 for the first time since early August, while the S&P 500 broke below 1,400. (Read More: Top Post-Election Market Declines)
“It’s now how quickly we can focus on the ‘fiscal cliff’
and coming up with a resolution—that's certainly the next item on the
agenda for the market,” said Art Hogan, managing director of Lazard
Capital Markets. "And you still have Europe."
Major U.S. Indexes
The Dow Jones Industrial Average plummeted 312.95 points, or 2.36 percent, to close at 12,932.73, logging its biggest one-day drop in almost a year. Bank of America [BAC
9.23
-0.71
(-7.14%)
] and JPMorgan [JPM
40.48
-2.40
(-5.6%)
] were the biggest blue-chip laggards.
-0.71
(-7.14%)
] and JPMorgan [JPM
40.48
-2.40
(-5.6%)
] were the biggest blue-chip laggards.
The S&P 500 tumbled 33.86 points, or 2.37 percent, to finish at 1,394.53. The Nasdaq slumped 74.64 points, or 2.48 percent, to end at 2,937.29.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, jumped near 19.
All key S&P sectors ended firmly in the red, led by energy and financials.
Apple [AAPL
558.0019
-22.1976
(-3.83%)
]
fell more than 3 percent, pushing the tech giant down a jaw-dropping 20
percent from its all-time high of $705.07 in mid-September. The stock
finished the session in bear market territory.
-22.1976
(-3.83%)
]
fell more than 3 percent, pushing the tech giant down a jaw-dropping 20
percent from its all-time high of $705.07 in mid-September. The stock
finished the session in bear market territory.
Obama was re-elected president Tuesday night, put over the top by the crucial battleground state of Ohio following the most expensive election in U.S. history.
Meanwhile,
ratings agency Fitch said Obama needs to move quickly to avoid the
"fiscal cliff," adding that failure to address the issue would likely result in a downgrade in 2013.
Moody's said it would make a decision following the budget
negotiations, though going over the "fiscal cliff" would not immediately
trigger a downgrade.
Wall Street had favored Romney and
the Republican ticket in part because it preferred their approach of
retaining tax cuts, and making spending cuts. The Obama Administration
favors raising taxes on the richest Americans, and also increasing
capital gains and dividend taxes. (Read More: Fixing 'Fiscal Cliff' Will Mean 'High, Higher' Taxes)
Across the pond, European shares reversed their gains to close sharply lower following
ECB President Mario Draghi's negative comments on the region's economy.
Draghi said economic activity in the euro zone area is expected to remain weak and the slowdown may have reached Germany.
And the members of Greece’s parliament are expected to vote on a new package of austerity measures
with the government’s majority under threat. If the bill doesn’t pass,
Greece will not receive its next financial aid installment of 31.5
billion euros ($40.2 billion) on Monday.
“The
U.S. election temporarily flipped worries over Europe, but Europe still
has an important role in global markets,” said Quincy Krosby, market
strategist at Prudential Financial. “They’ve obviously been a chronic
condition, but it’s flare ups like today that grab attention.”
Among earnings, Macy's [M
40.45
-0.93
(-2.25%)
] reported a higher profit, thanks to sales gains, and the department-store chain also boosted its full-year earnings guidance.
-0.93
(-2.25%)
] reported a higher profit, thanks to sales gains, and the department-store chain also boosted its full-year earnings guidance.
Kraft Foods [KRFT
44.57
-0.13
(-0.29%)
] ended slightly lower even after the newly independent food manufacturer reported a higher profit and affirmed its 2013 outlook.
-0.13
(-0.29%)
] ended slightly lower even after the newly independent food manufacturer reported a higher profit and affirmed its 2013 outlook.
Bucking the trend, Time Warner [TWX
44.91
1.80
(+4.18%)
] rallied after the media company posted better-than-expected earnings.
1.80
(+4.18%)
] rallied after the media company posted better-than-expected earnings.
Qualcomm [QCOM
58.1213
-2.2487
(-3.72%)
], CBS [CBS
34.00
-0.43
(-1.25%)
] and Activision Blizzard [ATVI
11.13
-0.21
(-1.85%)
] are among companies slated to post earnings after the closing bell.
-2.2487
(-3.72%)
], CBS [CBS
34.00
-0.43
(-1.25%)
] and Activision Blizzard [ATVI
11.13
-0.21
(-1.85%)
] are among companies slated to post earnings after the closing bell.
Treasury prices slipped from session highs after the government auctioned $24 billion in 10-year notes at a high yield of 1.675 percent. Bid-to-cover was 2.59.
On the economic front, weekly mortgage applications declined last week as
Hurricane Sandy battered the East Coast and disrupted normal business
activity, according to the Mortgage Bankers Association.
And
consumer borrowing expanded by $11.36 billion in September, according
to a Federal Reserve report. Economists polled by Thomson Reuters
expected a gain of $10.1 billion.
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