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Wall Street gives thumbs down to four more years

Stocks on Wall Street tumbled to their lowest levels in three months as investors delivered their negative verdict on President Obama’s next four-year term.

At the close (10am NZ time), the Dow Jones Industrial Average had dropped 312.95 points, or 2.4%, to 12,932.73.

This was the blue-chip index's biggest one-day decline since November 9, 2011. It was also the Dow's lowest level since early August.

The S&P index was down 2.4% to 1394.53, with all 10 of the sectors and more than 95% of the 500 stocks losing ground.

The technology-heavy Nasdaq Composite declined 2.5% to 2937.29.

Leading the declines were energy stocks, as crude-oil futures tumbled and the outlook for coal darkened. The industry is facing regulation under the second Obama administration. Similarly affected financial stocks were also hit hard by investor concerns.

President Obama will face a divided legislature, with the Republicans retaining their majority in the Congress. This increases the likelihood of the US going over the "fiscal cliff" – a previously agreed combination of government spending cuts and revenue increases.

This is set to take place on January 1 unless the Congress reaches a compromise to avert the policy changes.

One of the key concerns for investors is a potential change in dividend tax policy, which would see taxes on dividends potentially tripling by year end for the highest-income tax brackets.

In commodities markets, gold futures slipped to about $US1710 an ounce while crude-oil futures tumbled 4% to about $US85.20 a barrel.

The US dollar moved higher against the euro but lost ground against the yen.


 

More by Nevil Gibson

Comments and questions
6

Hardly surprising.

When your profitability is built on underpaying, shipping jobs to China, using pseudo bankruptcy to do away with pension obligations, and avoiding company taxes, the failure to get one of your boys (Romney) in the presidency will of course make things a little less rosy.

Perhaps the market was responding more to the news out of Europe, with the Germans announcing the GFC contaigion had reached their economy too?

Its really no different to the Labour party getting elected here. That would cause a market decline as well (especially given the green tinge...)

The trouble is we virtually have a labour party in power. The jokes about national being labour lite is so true.

Dow overvalued anyway
Should be in the late10,000,s not late 12,000,s

And where were these "investors" when Wall Street was crying out for help 5 years ago? That was when the government used taxpayer money to bail out financial institutions for a mess caused by the "irrational exuberance" of the so-called market.

Now, the taxpayers have voted and have made their decision clear in unequivocal terms. Wall Street needs to respect that decision instead of crying like a spoilt brat.