Stocks in Wall Street continue to decrease now for the fourth day as most investors are starting to become really worried on the real situation of the American economy. The stock market in the United States has become extremely unstable for the last five months now after the Democratic Party proposed the first deal for the fiscal cliff issue. The fiscal cliff is an issue that has been affecting the American economy for weeks now, even though the talks didn’t end yet.
The comments that were made by Senator Harry Reid regarding tax hikes resulted in stocks decreasing. S&P 500 decreased by 2.7%, the lowest point in four days and many analysts believe that it will continue decreasing. This is considered to be the lowest point for most stocks within these last three months. Business experts believe that this is just a start and stocks will continue decreasing for the next months.
The CBOE volatility index, a measurement used to evaluate investor fear, increased to 20. This is the first time the index increases in this way since last July. Many investors are starting to fear that the fiscal cliff is going to push the American economy into the worst recession the country will ever experience. This isn’t the case with American investors only, international traders who invest in Wall Street stocks are also starting to get really worried.
Most stocks of financial and banking sectors decreased by 2%, but this was expected as they are the most vulnerable to the change taking place in the economy right now. Banks are one of the few sectors that are automatically affected by any negative changes in the economy. Business experts are now criticizing the government for failing to agree on the deal around tax increases.
Dow Jones stocks decreased by 106.63 points and the Nasdaq index decreased by 27.48 points. Frank Lesh, an analyst in Future Path, said that most of his clients are currently delaying trading because of the uncertainties going on in the market right now. Timothy Geithner, the Treasury Secretary, announced yesterday that the United States is in the risk of reaching a debt ceiling very soon.
Economic data released within the last few days confirm that the country is heading towards a crisis. The only sector that is doing great so far is the housing sector even though there are various problems going on regarding foreclosure problems.