Wall Street is observing the ‘fiscal cliff’ and feeling dizzy. On Friday, the stock market ended one amongst the year’s worst weeks, thrusting Washington to implement an agreement to evade the government spending cuts and tax increases to begin to be effective from January 1.
The remarks by Barack Obama (re-elected President) and John Boehner (House Speaker) on the approaching cut-off date did not do anything much for cheering the market. The stocks closed hardly higher for the day.
Florida-based Global Financial Private Capital of Sarasota’s chief investment officer, Chris Bertelsen told that he hopes Obama and Congress to arrive at a compromise to shun away the financial cliff.
The industrial average of Dow Jones dropped 2.1% or 277 points for the week. The Dow has shed 795 points after striking 13,610, its closing high for the year on October 5.
During the week, the Standard & Poor shed 2.3%, the worst weekly drop after June 1, when the concerns of the investors were increasing about Europe’s debt crisis.
Stocks started to drop on Wednesday in the year’s largest trade-off after voters returned Barack Obama, a Republican House and a Democratic Senate to power. Immediately, the investors turned to fearing about the fiscal cliff.If the spending cuts and tax increased come into effect fully, the United States will probably go back to recession, as stated by the Congressional Budget Office.
On Friday, Boehner told that he was still not willing to increase the rates of tax on the higher-income individuals. But, he did keep open the probability of stabilizing spending cuts with revenue hikes that come from few revisions to tax code. The stocks handled a small rally. Dow climbed by around 30 points when Boehner began to talk and around 80 points a little later.
Later, Obama told he would not admit any move to federal shortage reduction that does not call for the prosperous to pay more taxes. Then, a spokesman told that Obama would prohibit legislation extending tax slashes for families earning $250,000 or higher.
The Dow started falling just ahead of the speech by Obama, at 1 PM and had lost its day’s profit by 1.30 PM. As they go into discussion with Obama about the fiscal cliff, the congressional leaders undoubtedly keep in mind what can ensue on Wall Street when the investors are concerned and observing every move of Washington.
The stocks stripped losses on Friday as the investors were motivated about the economy from a statement by the University of Michigan, indicating that the confidence of consumers increased more than anticipated in November.