Teh One Who Knocks
11-08-2012, 10:49 PM
Adam Shell and Matt Krantz, USA TODAY
November 8. 2012 - For the second day in a row following President Obama's election to a second term, the Dow Jones industrial average suffered a triple-digit decline as investors fretted over the prospects of higher taxes and the economy getting hurt by the nation's fiscal troubles.
Analysts say that prior to Tuesday's presidential election, Wall Street had not really priced in the prospect of taxes going up on stock gains and dividends, nor had investors factored in the prospect that lawmakers might not be able to compromise and avert the draconian tax hikes and government spending cuts, known as the fiscal cliff, scheduled to kick in on Jan. 1.
"We expect no significant reduction in public policy uncertainty, which shifts the risks to the downside for stocks and risky assets in general, Barry Knapp, strategist at Barclays, told clients in a research note.
The Dow sank 0.9%, a 122-point drop.
Off 1.1% and 1.4%, respectively, were the S&P 500 and the Nasdaq composite index.
Investors were focused on trouble in Europe, and the "fiscal cliff" in the U.S., which could push the economy back into recession of Congress doesn't head off a package of automatic tax increases and spending cuts set to take effect Jan. 1.
There was encouraging news from Europe, where leaders shocked markets a day earlier with a dire forecast for economic growth next year.
European Central Bank head Mario Draghi said Thursday that financial market confidence "has visibly improved" as the 17-country group that uses the euro struggles with its debt crisis. But he said the outlook for the economy remains "weak." Draghi spoke after the bank's governing council left its key interest rate unchanged at 0.75%.
The European Commission, the executive arm of the EU, on Wednesday slashed cut its outlook for growth for this year and 2013. The report helped set off a sharp decline in stocks in the U.S and Europe.
The Dow Jones industrial average plunged 313 points Wednesday, its fifth worst one-day drop following a U.S. presidential election. The biggest, in 2008, came in the midst of the financial crisis on the day after President Obama won his first term.
The sell-off came as investors turned their focus back to Europe's problems and a package of tax increases and government spending cuts in the U.S. that could stall the economic recovery unless Congress acts by Jan. 1.
Among stocks making big moves Thursday:
— Energy drink maker Monster Beverage (MNST) sank 1.3% to $44.40 after the company said its revenue growth slowed in the third quarter.
— Dean Foods (DF) rose 2% to $16.40 after the company reported a third quarter profit of $36 million for the third quarter, compared with a $1.5 billion loss in the same period a year earlier.
Investors are keenly aware of Congress' game of chicken with the fiscal cliff. But what's starting to get some just as nervous is the sputtering of many market leaders, like Apple. The tech giant slid 3.6% on Thursday to $537.75, near the midway mark in its 52-week high and low range.
The market's heavy reliance on leading stocks, such as Apple, may have been fine when they were going up, but now that they're starting to crack, it's just another knock for investors to deal with.
The fall in shares of Apple, along with other favorite stocks, is a major anchor for the rest of the stock market to overcome. Apple alone accounts for 10% of the Nasdaq composite index and 5% of the Standard & Poor's 500. Many mutual fund managers and individual investors have bet big on the stock.
Apple is just one example of a leading stock that's not behaving that way as the market sells off. Chipotle Mexican Grill is another must-own stock with many individual investors. Shares of the burrito chain are now down nearly 40% from their 52-week high.
During times such as these, investors look to other stocks and industries to emerge. Health care stocks, such as Tenet Healthcare, have shown strength. Home builders, such as Lennar, are also re-emerging from the long and dragged-out housing bust.
But investors have vested so much attention on falling leaders, their declines serve up another point of pain.
November 8. 2012 - For the second day in a row following President Obama's election to a second term, the Dow Jones industrial average suffered a triple-digit decline as investors fretted over the prospects of higher taxes and the economy getting hurt by the nation's fiscal troubles.
Analysts say that prior to Tuesday's presidential election, Wall Street had not really priced in the prospect of taxes going up on stock gains and dividends, nor had investors factored in the prospect that lawmakers might not be able to compromise and avert the draconian tax hikes and government spending cuts, known as the fiscal cliff, scheduled to kick in on Jan. 1.
"We expect no significant reduction in public policy uncertainty, which shifts the risks to the downside for stocks and risky assets in general, Barry Knapp, strategist at Barclays, told clients in a research note.
The Dow sank 0.9%, a 122-point drop.
Off 1.1% and 1.4%, respectively, were the S&P 500 and the Nasdaq composite index.
Investors were focused on trouble in Europe, and the "fiscal cliff" in the U.S., which could push the economy back into recession of Congress doesn't head off a package of automatic tax increases and spending cuts set to take effect Jan. 1.
There was encouraging news from Europe, where leaders shocked markets a day earlier with a dire forecast for economic growth next year.
European Central Bank head Mario Draghi said Thursday that financial market confidence "has visibly improved" as the 17-country group that uses the euro struggles with its debt crisis. But he said the outlook for the economy remains "weak." Draghi spoke after the bank's governing council left its key interest rate unchanged at 0.75%.
The European Commission, the executive arm of the EU, on Wednesday slashed cut its outlook for growth for this year and 2013. The report helped set off a sharp decline in stocks in the U.S and Europe.
The Dow Jones industrial average plunged 313 points Wednesday, its fifth worst one-day drop following a U.S. presidential election. The biggest, in 2008, came in the midst of the financial crisis on the day after President Obama won his first term.
The sell-off came as investors turned their focus back to Europe's problems and a package of tax increases and government spending cuts in the U.S. that could stall the economic recovery unless Congress acts by Jan. 1.
Among stocks making big moves Thursday:
— Energy drink maker Monster Beverage (MNST) sank 1.3% to $44.40 after the company said its revenue growth slowed in the third quarter.
— Dean Foods (DF) rose 2% to $16.40 after the company reported a third quarter profit of $36 million for the third quarter, compared with a $1.5 billion loss in the same period a year earlier.
Investors are keenly aware of Congress' game of chicken with the fiscal cliff. But what's starting to get some just as nervous is the sputtering of many market leaders, like Apple. The tech giant slid 3.6% on Thursday to $537.75, near the midway mark in its 52-week high and low range.
The market's heavy reliance on leading stocks, such as Apple, may have been fine when they were going up, but now that they're starting to crack, it's just another knock for investors to deal with.
The fall in shares of Apple, along with other favorite stocks, is a major anchor for the rest of the stock market to overcome. Apple alone accounts for 10% of the Nasdaq composite index and 5% of the Standard & Poor's 500. Many mutual fund managers and individual investors have bet big on the stock.
Apple is just one example of a leading stock that's not behaving that way as the market sells off. Chipotle Mexican Grill is another must-own stock with many individual investors. Shares of the burrito chain are now down nearly 40% from their 52-week high.
During times such as these, investors look to other stocks and industries to emerge. Health care stocks, such as Tenet Healthcare, have shown strength. Home builders, such as Lennar, are also re-emerging from the long and dragged-out housing bust.
But investors have vested so much attention on falling leaders, their declines serve up another point of pain.