U.S. stocks slammed on fiscal-cliff fears Europe’s debt

U.S. stocks slammed on fiscal-cliff fears
Europe’s debt troubles also weigh on sentiment
NEW YORK (MarketWatch) — U.S. stocks dived on Wednesday — the worst day of the year for the Dow Jones Industrial Average — as anxiety about the “fiscal cliff” and Europe’s economic troubles hammered sentiment.

President Barack Obama defeated Republican challenger Mitt Romney in Tuesday’s presidential election and secured a second term. In congressional elections, Republicans maintained control of the House of Representatives, while Democrats retained control of the Senate.

With the election over, Wall Street turned to pondering the more than $600 billion in tax hikes and spending cuts scheduled to take effect in January should Congress fail to reach a deficit-cutting deal.

“The fiscal cliff is now the base-case scenario,” said Dan Greenhaus, chief global strategist at BTIG LLC.
“Today with Obama being re-elected, people are saying ‘wait a second, this is a real possibility,’” said Greenhaus.

After dipping under 13,000 for the first time since Sept. 4, the Dow Jones Industrial Average (DJI JIA) sank 312.95 points, or 2.4%, to end at 12,932.73. The Dow last closed under 13,000 on Aug. 2.

In 2008, the Dow fell 5.1% the day after Obama was elected to the White House, after rising 3.3% on Election Day.

An analysis of the market’s reaction to all presidential elections since 1900 found the Dow’s day-after reaction to be an unreliable if not misleading indicator about the market’s direction for the next four years.

On Wednesday, Bank of America Corp. (NYSE:BAC) and J.P. Morgan & Co. (NYSE:JPM) led losses for the Dow, which extended to all 30 of its components.
“It’s hard to say with the Dow down 300 points that there is no panic selling,” but the relatively muted reaction by the VIX, or the Chicago Board Options Exchange Market Volatility Index (MDE:VIX) , signaled the market’s steep decline could be short-lived, said Randy Frederick, managing director of active trading and derivatives at Charles Schwab & Co.

Dropping under the psychologically significant 1,400 level, the S&P 500 index (SNC:SPX) lost 33.86 points, or 2.4%, to 1,394.53. The finish below the support line sends a bearish technical signal, Frederick said.
http://www.marketwatch.com/story/us-stocks-sl...2012-11-07