Stocks Drop Following Obama's Re-election
Evidently, President Obama had no time to bask in the glory of victory, amidst a looming fiscal showdown and a divided Congress capable of thwarting his efforts. Republicans will be in a position to block Obama's ambitions -– including immigration and tax reforms -– as they maintained a majority in the House of Representatives, while Democrats retained Senate control.
Markets plummeted on Wednesday morning with the Dow down 300 points, trading below 13,000 -- a first since August. The S&P 500 Index was off about 2.04% to 1,399.20.
While this slump could be construed as displeasure with the Obama re-election, the S&P has rallied a steady 50 percent since Obama was inaugurated in early 2009. However, the incumbent's immediate focus should be taking the “fiscal cliff” and automated tax cuts head on.
The post-election swoon was coupled by Eurozone debt woes leading to a further downward trend in the international financial markets, as investors gravitated towards ‘safer' assets. The euro slumped against the dollar, Wednesday, as the US stock index futures exhibited similar trend. This came after European Central Bank President Mario Draghi cautioned that the effects of the Eurozone crisis could impact the largest economy in the region.
“Germany has so far been largely insulated from some of the difficulties elsewhere in the euro area. But the latest data suggest that these developments are now starting to affect the German economy,” Draghi said in remarks prepared for delivery in Frankfurt.
The financial select index SPDR (NYSE: XLF) fell over 2 percent.
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