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Stocks dive 1% after Boehner's plan fails in House

December 21, 2012|By Andrew Tangel
  • On the floor of the New York Stock Exchange.
On the floor of the New York Stock Exchange. (Justin Lane / EPA )

The House's failure to vote on Speaker John Boehner's "Plan B" to avert the so-called fiscal cliff led to a sharp early sell-off on Wall Street.

The Dow Jones industrial average was down 117 points, or 0.9%, to 13,195 shortly after the opening bell Friday.

The broader Standard & Poor's 500 index fell 14 points, or 1%, to 1,429. The technology-heavy Nasdaq was down 45 points, or 1.5%, to 3,005.

The U.S. House of Representatives' failure to bring Speaker Boehner's plan to a vote Thursday fueled pessimism that hyper-partisan Washington could defuse a looming fiscal crisis that economists predict could lead to a recession.

Boehner abruptly canceled a vote late Thursday on his "Plan B" that would prevent taxes going up at year's end for all but those earning more than $1 million a year. The speaker was scheduled to hold a press conference Friday morning.

Only six business days, including Friday but excluding Christmas, remain before the  new year, when automatic spending cuts and tax increases are scheduled to go into effect.

Investors will likely see the market swing in coming days as House Republicans, President Obama and Senate Democrats maneuver ahead of the year-end deadline -- or maybe even into early next year.

"As the fiscal cliff debate has yet to be resolved, we expect any related policy news to become an even more prominent market mover in early 2013," Goldman Sachs analysts wrote in a note.

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