US stocks fell one per cent yesterday as investors worried over US budget negotiations and a flare-up of violence in the Middle East.
Investors are grappling with the impact of the US “fiscal cliff,” a series of mandated tax hikes and spending cuts that start to take effect early next year.
US President Barack Obama pushed for his proposal to have the wealthy pay more in taxes as a way to tame the federal deficit, taking a hard line in his opening bid before he begins talks with US law makers later in the week.
“I think we will have a last-minute cliffhanger solution,” said Michael Cheah, portfolio manager at SunAmerica Asset Management in Jersey City, New Jersey, about a deal to avoid the so-called cliff. “In the meantime, the market is going to get punched every day.”
The Dow Jones industrial average fell 125.64 points, or 0.98 per cent, to 12,630.54. The S&P 500 Index dropped 11.83 points, or 0.86 per cent, to 1,362.70. The Nasdaq Composite Index dropped 22.43 points, or 0.78 per cent, to 2,861.46.
Wall Street had opened higher after Dow component Cisco Systems reported first-quarter earnings and revenue late Tuesday that beat expectations, driving its shares up 4.8 per cent to $17.66.
But the positive momentum was short-lived. European equities fell and the benchmark FTSEurofirst-300 lost one per cent as Greece’s unresolved crisis raised questions about the region’s potential for economic growth, while anti-austerity strikes added to concerns.