There was a sea of red across the U.S. equity boards last night as investors hit the sell button as concerns about the fiscal cliff weighed on the market, along with increasing fears of turmoil in the Middle East.
By the close the Dow Jones had slumped 185 points (-1.45%) to 12,572, while the NASDAQ was sold-off by 37 points (-1.29%) to 2847.
Stocks have been under pressure as concerns about the fiscal cliff have dominated the market following the re-election of President Obama.
Most investors expect a compromise, but they are not taking any chances until Obama and Republicans in Congress reach a deal to avert automatic tax hikes and spending cuts that could push the economy back into recession.*Federal Reserve minutes
The Federal Reserve issued minutes from its latest policy meeting, saying: "Many participants saw the uncertainty attending the unresolved U.S. fiscal situation and the ongoing fiscal and financial strains in the euroarea as factors likely to restrain the pace of economic growth in coming months."
U.S. central bankers were also closer to revamping the Fed's guidance on what economic conditions would have to be in place before interest rates rise for the first time since the financial crisis.
At the moment, the Fed is relying on a calendar date, saying it expects to keep rates near zero until mid-2015. The new approach would follow a plan set out by Chicago Federal Reserve President Charles Evans who wants the central bank to tell the market it will keep rates low until the unemployment rate falls below 7% as long as inflation remains below 3%.*Europe strikes*
As general strikes took place in six eurozone nations, the Bank of England said the U.K. economy may contract further in the fourth quarter with growth subdued for the foreseeable future as the continuing eurozone crisis dampened demand for exports.*U.S. Corporate News and Action*
Shares of Facebook (NASDAQ:FB) jumped Wednesday, bucking expectations of a sell-off with the unlocking of hundreds of millions of shares held by insiders now eligible for sale in the open market.
The stock was up nearly 12% as a lockup period for more than 800 million shares — the third and biggest wave after the company’s eventful IPO in May — expired. The latest lockup expiration is expected to nearly double the size of the company’s existing share float.
Networking equipment giant Cisco (NASDAQ:CSCO) reported profits and sales that beat expectations late Tuesday.
Cisco said fiscal first-quarter net income increased 18 per cent to $2.1 billion, or 48 cents per share, on revenue of $11.9 billion, beating analyst estimates of a profit of 46 cents on revenue of $11.8 billion, according to Thomson Reuters. Shares in the company rose more than 6%.
Shares of Abercrombie & Fitch Co. (NYSE:ANF) also surged after the teen apparel retailer raised its full-year profit outlook.
Meanwhile, office supplies chain Staples (NASDAQ:SPLS) Wednesday posted a third-quarter loss but managed to beat Street estimates, despite restructuring charges of about $840 million. In September, Staples outlined plans to close 30 stores in North America and 45 stores in Europe.