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Overnight Markets: Wall Street drops amid continuing fiscal concerns

The Dow Jones shed 185 points after increased violence in the Middle East added to the negative sentiment.

Overnight Markets: Wall Street drops amid continuing fiscal concerns

U.S. stocks declined on Wednesday amid concern about the budget debate in Washington after President Barack Obama stuck to his pledge to raise taxes on the wealthy, and as violence increased in the Middle East.

The Dow Jones industrial average fell 185 points, or 1.45%, to 12,571 at the close. The S&P 500 dropped 19 points, or 1.39%, to 1,355. The Nasdaq Composite lost 37 points, or 1.29%, to 2,847.

Wall Street opened higher after Cisco Systems Inc reported first-quarter earnings and revenue late Tuesday that beat expectations, driving its stock up 4.8%. But the positive momentum was short-lived.

Investors shed positions amid continuing uncertainty over the looming fiscal cliff after Obama, in his first press conference since re-election, held to his position that marginal tax rates will have to rise to tackle the nation's deficits.

Adding to the negative sentiment, Israel launched a major offensive against Palestinian militants in Gaza, killing the military commander of Hamas in an air strike and threatening an invasion of the enclave. Egypt recalled its ambassador from Israel in retaliation.

Industrial shares suffered the most after a 1% spike in crude prices after the Israeli offensive on Gaza.

FedEx Corp shares fell 3.7%, while Boeing erased 2.8%. Bank of America lost 3.6% and JP Morgan declined 1.9%.

Home Depot Inc. fell 3%, while Advanced Micro Devices Inc. fell 7.7% after the second-largest maker of personal-computer processors said it isn’t actively pursuing a sale of the company or a significant sale of assets.

In contrast, Facebook surged 12.6% as investors were relieved that expiring trading restrictions on a huge block of shares did not trigger an immediate wave of insider selling.

Zynga Inc. rose 1.4% after the largest maker of games played on social networks said chief financial officer David Wehner is departing to take a senior finance job at Facebook.

Teen clothing retailer Abercrombie & Fitch Co jumped 34.4% after the company reported unexpectedly improved third-quarter results.

In Asia, most equities fell on Thursday amid concern a budget standoff in the U.S. But Japanese shares rose on speculation a change of government may result in more action to stimulate the economy.

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5 comments so far. Why not have your say?

joe stalin

Nov 15, 2012 at 08:24

The world is coming to an end oh dear but then it is options expiration tomorrow.

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Nov 15, 2012 at 08:57

What fiscal cliff. It would not happen. The market needed a correction and everyone is blindly blaming the fiscal cliff.

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joe stalin

Nov 15, 2012 at 09:05

Oh dear and now we have beetr than forecast GDP data from Europe! What a disaster oh it must be a conspiracy so dont believe it or at least not until Monday anyway. These markets are a joke. Of course the fiscal cliff is not going to happen it does not stop every man and his dog in the financial media from hyperventilating over it.

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an elder one

Nov 15, 2012 at 09:40

It's all a fiddle by manipulators so they can buy in cheap.

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Nov 15, 2012 at 14:26

Elder one, I disagree.

I just sit on the sidelines, and I am not selling so how can I be manipulating, except by keeping my money in my pocket until the price is right (for me)?

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