Business
Warning of Financial Cliff Thrusts Stock Market Lower
The traders returned to work after the Thanksgiving holiday weekend to the same old fears about financial cliff in addition to the European debt crisis, and things didn’t seem to get any better during the first three days of the week.
In mid-day trading on Monday, the stock market declined as Washington policymakers and business groups argued over the correct rates for spending on taxing. In Europe, the leaders made attempts to cobble together one more loan bailout for Greece.
By afternoon, the industrial average of Dow Jones dropped to 12,919, by 91 points. The S&P’s 500 fell to 1,401 by 8 points, while the NASDAQ composite index went down to 2,960 by 7 points.
On the whole, it was a silent morning without any vital economic statement due in the United States and no major firms slated to make huge announcements.
What followed next was just a slight improvement in Asian stocks on Tuesday.
Portland-based Leader Capital’s co-portfolio manager, Scott Carmack told the fall was everything, but unavoidable looking at how the market surged previous week. It was one amongst the best weeks for Dow throughout the year and followed around 4 weeks of drops. Positive economic reports from China and Germany (in addition to Friday’s initial reports that holiday shopping had started strongly) assisted to thrust the market higher.
That turned out Monday to be a good day for cashing out on the gains of previous weeks, according to Carmack, particularly because the traders are not confident of how the financial cliff will influence the market for the remaining days of the year.
It is still hard to measure how this holiday shopping season will turn out to be for retailers, who depend highly on the Christmas season. The National Retail Federation (NRF) stated that 247 million shoppers visited the shopping websites and stores during the Thanksgiving weekend, which is up 9% when compared to a year back. On an average, they spent $423, up 6%.
Few are worried that the momentum will not last. Retailers like Target, Saks, and Macy’s were weak in early trading. Saks dropped 41 cents to $10.11, while Macy’s declined $1.55 to $40.17. The exception here was Abercrombie & Fitch, increasing 37 cents to $44.77.
Put the blame on the disturbing hangover of the financial cliff. That’s the time when higher taxes as well as cuts to government schemes, like Social Security and unemployment benefits, will step in at the yearend unless the White House and Congress work out a solution prior to that.
