Stocks lower on worries of fiscal cliff
David Russell | email@example.com
The S&P 500 is indicated lower about 0.40 percent, while European indexes are lower by half a percent to a full percentage point. Most Asian bourses declined overnight as well, despite better-than-expected industrial production in China.
Already battered by a series of weak profit forecasts tied to economic weakness in Europe, investors now face the risk of the "fiscal cliff" in the United States at the beginning of 2013. The feared crisis would automatically increase taxes and lower government spending, with the potential to send the economy into recession.
Following a strong rally in the third quarter, the S&P 500 has been dropping for the last month and is now attempting to hold support around its 200-day moving average. There was also huge demand for Treasury bonds yesterday as investors looked to preserve their capital and eschewed risk-taking.
Foreign exchange is showing a cautious tone as well, with the euro lower and the Japanese yen higher across the board. The Australian dollar is also falling despite the strong economic news from China, which suggests that investors consider the U.S. fiscal cliff a bigger catalyst to the downside than recovery on the mainland.
Commodities are painting a mixed picture, with economically sensitive items such as oil and copper falling. Precious metals, viewed as a hedge against the fiscal cliff, are holding their ground.
In company-specific news Kyak Software is indicated to open higher by more than 25 percent after agreeing to be purchased by Priceline. Groupon is plunging after quarterly resulted missed expectations, and media giant Walt Disney is down by about 3 percent after revenue missed estimates and management warned of rising costs.