Friday morning stocks opened considerably lower on Wall Street just after House Republicans called off a vote on tax rates increases for those making over $1 million per year, and left federal budget talks in a mess. All this just ten days before the tax increases and government spending cuts take effect due to the fact that neither side can come to terms.
In just under thirty minutes of trading Friday morning, the Dow Jones Industrial Average fell 114 points to 13,196, which is a decline of just about 1 percent. It closed even lower — 13190.84. Standard & Poor’s and Nasdaq also fell.
If Congress does not come to an agreement in the immediate future, taxes will rise for every American taxpayer starting on January 1st.
There has been much talk about “Plan B,” and also denial, as it did not get the needed support from the Republican-lead House to push through an agreement. House Speaker John Boehner asked for both parties to try to work something out as time is drawing close to the new year. Unfortunately, the plea fell on the deaf ears of both parties.
The problem now is that the Holidays and New Year are fast approaching. Nothing will get resolved as the House will not meet until after Christmas at the earliest, and maybe not until after the New Year.
The company that took the hardest hit within the first hour of trading Friday morning was Apple. This is hard to understand as we are in the final week before Christmas — last-minute shoppers have only just begun to shop, and previous sales totals showed that the iPads and iPhones were flying off the store shelves during black Friday sales.
Wall Street seems to be showing signs of worry. The stocks are a very good way to see how the rest of the world is doing economically besides the Unites States. It also is a great way after elections to see if America made the right choice with the candidate taking office. They chose Obama for a second term and the stocks reflected that choice. The very next day after the election, returning Obama to the Presidency, the Dow dropped 312 points. On Nov. 14, when President Barack Obama insisted on higher tax rates for the wealthy, the Dow dropped 185 points.
Bonds have taken a hit too. The 10-year U.S. Treasury note fell 0.06 percentage point to 1.74 percent. This is proof that investors are moving money out of stocks and into safer government bonds.
Finally, oil fell $2.02, or 2.2 percent, to $88.12 per barrel. The price of gas has dropped over thirty cents at the pump in the last three days. It makes it great for travelers heading out on the roads to spend the holidays with family and friends, but after the holidays are over we still have the issue of the fiscal cliff looming.
As this year winds down and the New Year heads our way, I along with many others hope that the coming year holds many wonderful opportunities and happy memories. The next week will be either doom or gloom for us tax payers as the fiscal cliff draws near.
You may want to ask Santa for a parachute — just in case we need to jump off that cliff.
- Market Plummets on Fiscal Cliff Worries (t3live.com)
- Stocks close down nearly 1% on fiscal cliff fears (money.cnn.com)
- Stocks sink after Republicans cancel budget vote (trib.com)
- Market Snapshot: U.S. stocks slide as budget hopes dim (marketwatch.com)
- Stocks set to fall as fiscal cliff looms (money.cnn.com)
- Fiscal cliff fears hit US stock markets and oil prices – The Guardian (guardian.co.uk)