Dow Sees Biggest Two-Day Drop Since 1987 After Obama Elected
The biggest two day drop in twenty-one years.
James Pethokoukis is calling this “The Obama Correction.”
“We’re a long way from the end of the economic challenges,” said Mike Morcos, who helps manage $1 billion at Old Second Wealth Management in Aurora, Illinois. “Earnings next year are going to be significantly lower and estimates are going to continue to come down.”
The Standard & Poor’s 500 Index fell 5 percent to 904.88, extending its two-day loss to 10 percent. The Dow Jones Industrial Average retreated 443.48 points, or 4.9 percent, to 8,695.79. The Russell 2000 Index of small U.S. companies declined 3.7 percent to 495.84. The MSCI World Index of 23 developed markets lost 5.9 percent to 925.09. . . .
About 481,000 workers filed initial jobless claims last week, the Labor Department said today in Washington, exceeding the 477,000 projected by economists surveyed by Bloomberg News. The number of people staying on benefit rolls was the most since February 1983…
Earnings at companies in the S&P 500 that have reported third-quarter results fell 9.2 percent on average, Bloomberg data show. Analysts expect full-year profits to drop 7.7 percent, according to a compilation of analysts’ estimates.
The economy was already week, to be sure, but anyone trying to argue that Obama doesn’t bear some responsibility here is fooling themselves.
You can’t campaign on massive tax hikes (both those promised by Obama himself and those that will happen when Obama and the Democrats “roll back” Bush’s tax cuts) in uncertain economic times and not expect the market to react when you win the election.
People are pulling their money out of the markets and locking it up. Because it’ll be cheaper to take profits from investment now than under Obama’s big new tax rates. And those looking to invest are putting off their plans, because the tax implications for their potential returns are ugly.
This is the natural effect to the cause of higher taxes. Why anyone would be surprised that this is happening is beyond me.
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JimH
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