Friday, April 18, 2014
YOLO COUNTY NEWS
99 CENTS

Stocks dip on challenges to come

The election behind them, U.S. investors dumped stocks Wednesday and turned their focus to a world of problems — economically harmful tax increases and spending cuts at home and a deepening recession in Europe.

The Dow Jones industrial average plunged as much as 245 points in the first hour of trading, and the Standard & Poor’s 500 index fell as much as 27, or 1.6 percent. Energy companies and bank stocks took big losses.

Stocks seen as benefiting from President Barack Obama’s decisive re-election rose. They included hospitals, free of the threat that a President Mitt Romney would have sought to roll back Obama’s health care law, and renewable-energy companies.

With the campaign resolved, traders’ attention returned to an increasingly ill European economy, dragged down by a debt crisis for more than three years. The 27-country European Union said unemployment there could remain high for years.

The European Commission, the executive arm of the EU, said that it expects the region’s economic output to shrink 0.3 percent this year. In the spring, the group predicted no change.

For next year, the commission predicted 0.4 percent growth, barely above recession territory. It predicted 1.3 percent last spring.

The EU also predicted a larger decline for the 17 nations that use the euro currency: 0.4 percent this year, slightly worse than a previous estimate of a 0.3 percent decline.

Mario Draghi, president of the European Central Bank, also warned that economic powerhouse Germany is no longer insulated from the region’s troubles.

In the U.S., stock futures were higher overnight, after Obama cruised to victory. They turned sharply lower after the European forecasts.

Obama’s win came after a costly campaign that blanketed markets with uncertainty about possible changes to tax rates, government spending and other issues seen as crucial to the prospects of some industries and the U.S. economy.

As those concerns subsided, traders confronted an ugly reality: The so-called fiscal cliff, which will impose automatic tax increases and deep cuts to government spending at the end of the year unless the president and Congress can reach a deal.

That’s no easy task for a deadlocked government whose overall composition has barely changed — a Democratic president and Senate and a Republican House.

If Congress and the White House don’t reach a deal, the spending cuts and tax increases could total $800 billion next year. Economists have warned that could be enough to push the economy back into recession.

“Obama’s re-election does not change the bigger economic or fiscal picture,” Paul Ashworth of Capital Economics Ashworth, an economic research company, said in a note to clients.

Tobias Levkovich, a financial analyst at Citi Research, told clients Wednesday that a compromise on taxes and spending was likely in mid- to late January, but that stocks will probably fall in the meantime.

A deal early next year is much more likely “once the political class begins to negotiate realistically and as the consequences . . . are too costly for either party to ignore,” he wrote.

Just after 10:15 a.m. EST, the Dow was down 240 points at 13,003. The S&P was down 26 points at 1,401. The Nasdaq composite index was off 57 points at 2,954.

As traders streamed into lower-risk investments, the yield on the 10-year Treasury note plunged to 1.64 percent from 1.75 percent late Tuesday. A bond’s yield declines as demand for it increases.

Broad industries reacted to the election much as analysts had expected.

Hospital companies soared because of expectations that they will gain business under the health care law, known as ObamaCare. HCA Holdings and Community Health Systems each leapt 6 percent, and Universal Health Services and Tenet Healthcare 5 percent.

With Obama seeking to restrain the growth of military spending, defense companies could struggle to win government contracts. Their stocks fell sharply: Lockheed Martin Lost 3 percent, Northrop Grumman 3 percent and General Dynamics 3 percent.

Among the 10 industry groups in the S&P 500 index, financial stocks and energy companies fell the most.

Banks figure to face tougher regulation in a second Obama term than they would have under Romney. JPMorgan Chase fell 3 percent, Citigroup 3 percent, Bank of America 4 percent and Goldman Sachs Group 4 percent.

The biggest losers were coal companies, which had hoped that a Romney administration would loosen mine safety and pollution rules that make it more costly for them to operate. Peabody Energy dived 7 percent, Consol Energy 4 percent, Alpha Natural Resources 9 percent and Arch Coal 10 percent.

Oil companies fell less steeply.

Alternative energy companies, especially solar manufacturers, rose on expectations that they will continue to enjoy generous subsidies. First Solar and Yingli Green Energy Holding each rose 2 percent.

————

By Daniel Wagner, AP business writer. Follow him at www.twitter.com/wagnerreports.

The Associated Press

LEAVE A COMMENT

Discussion | No comments

The Davis Enterprise does not necessarily condone the comments here, nor does it review every post. Read our full policy

.

News

 
Chuck Rairdan joins school board race

By Jeff Hudson | From Page: A1, 3 Comments

Going green at church, school, everywhere

By Special to The Enterprise | From Page: A1 | Gallery

 
Former caretaker convicted of murder, elder abuse

By Lauren Keene | From Page: A1, 4 Comments | Gallery

Old friend helps Brad and others find kidneys

By Dave Jones | From Page: A1, 1 Comment | Gallery

 
Ukraine insurgents reject call to quit buildings

By The Associated Press | From Page: A2, 8 Comments

 
For the record

By Enterprise staff | From Page: A2

UCD to host Global Health Day event

By Cory Golden | From Page: A2

 
‘Hitchhiking’ dog looking for new home

By Lauren Keene | From Page: A3 | Gallery

 
Need a new best friend?

By Enterprise staff | From Page: A3 | Gallery

 
Online K-12 school holds info night

By Enterprise staff | From Page: A4

Volkssporting Club plans North Davis walks

By Enterprise staff | From Page: A4

 
Schwenger lawn signs available

By Anne Ternus-Bellamy | From Page: A4

Volunteers needed for Grad Night

By Enterprise staff | From Page: A4

 
Davis grad makes rain collection a business

By Jason McAlister | From Page: A4 | Gallery

A few spots left on history tour

By Enterprise staff | From Page: A4

 
Chipotle fundraiser boosts Emerson tech upgrade

By Enterprise staff | From Page: A4

Event to provide nature scholarship

By Enterprise staff | From Page: A4

 
Students have new options on leasing front

By Enterprise staff | From Page: A5 | Gallery

Groups join for a day of service

By Special to The Enterprise | From Page: A7

 
NAMI backers walk in Sacramento

By Special to The Enterprise | From Page: A8

 
Food for the hungry

By Enterprise staff | From Page: A10, 1 Comment

.

Forum

Dad makes mom look bad

By Special to The Enterprise | From Page: B5

 
Early help is a great investment

By Letters to the Editor | From Page: A6

More tax money? Answer the question

By Rich Rifkin | From Page: A6, 10 Comments

 
UCD IS responsible for students

By Letters to the Editor | From Page: A6, 5 Comments

 
Tom Meyer cartoon

By Debbie Davis | From Page: A6

In search of great ideas

By Letters to the Editor | From Page: A6, 1 Comment

 
Please keep the nursery open

By Letters to the Editor | From Page: A6

.

Sports

Sharks double up Kings in Game 1

By The Associated Press | From Page: B1

 
Aggies lose a slugfest in opener at Riverside

By Enterprise staff | From Page: B1

Fox coming to UCD; Riffle heads to Florida

By Bruce Gallaudet | From Page: B1

 
DHS’ Golston goes full-bore on the diamond

By Thomas Oide | From Page: B1 | Gallery

Devils show more life in loss to Mitty

By Enterprise staff | From Page: B1

 
DYSA roundup: Intensity has big week; 10U games dominate schedule

By Enterprise staff | From Page: B2 | Gallery

Sports briefs: Aggies set the academic bar high

By Enterprise staff | From Page: B8 | Gallery

 
Pro baseball roundup: Susac sends Sacramento to a rare loss

By The Associated Press | From Page: B8

.

Features

.

Arts

‘Transcendence’: A whole new level of tedium

By Derrick Bang | From Page: A11 | Gallery

 
‘The Bloom’ paves way for Whole Earth Festival

By Enterprise staff | From Page: A11

DHS tribute to Tony Fields slated for April 25-26

By Enterprise staff | From Page: A11

 
UCD, city team up for Music on the Green

By Enterprise staff | From Page: A11

.

Business

Ford turns its Focus to domestic market

By Ali Arsham | From Page: B3 | Gallery

 
.

Obituaries

.

Comics

Comics: Friday, April 18, 2014

By Creator | From Page: A9

 
.

Real Estate Review

Featured Listing

By Zack Snow | From Page: RER1

Professional Services Directory

By Zack Snow | From Page: RER2

Lyon Real Estate

By Zack Snow | From Page: RER3

Acacia at Huntington Square

By Zack Snow | From Page: RER4

Jamie Madison

By Zack Snow | From Page: RER4

Yolo FCU

By Zack Snow | From Page: RER4

Travis Credit Union

By Zack Snow | From Page: RER5

Kim Eichorn

By Zack Snow | From Page: RER6

Suzanne Kimmel

By Zack Snow | From Page: RER6

Lynne Wegner

By Zack Snow | From Page: RER7

Kim Merrel Lamb

By Zack Snow | From Page: RER7

Patricia Echevarria

By Zack Snow | From Page: RER8

Chris Snow

By Zack Snow | From Page: RER8

Andrew Dowling

By Zack Snow | From Page: RER9

Sheryl Patterson

By Zack Snow | From Page: RER9

Don Guthrie

By Zack Snow | From Page: RER9

Coldwell Banker

By Zack Snow | From Page: RER10

Coldwell Banker

By Zack Snow | From Page: RER11

Heather Barnes

By Zack Snow | From Page: RER12

Julie Partain & Dick Partain

By Zack Snow | From Page: RER12

Malek Baroody

By Zack Snow | From Page: RER13

Karen Waggoner

By Zack Snow | From Page: RER14

Willowbank Park

By Zack Snow | From Page: RER14

Team Traverso

By Zack Snow | From Page: RER15

Julie Leonard

By Zack Snow | From Page: RER15

Tim Harrison

By Zack Snow | From Page: RER15

Tracy Harris

By Zack Snow | From Page: RER16

Lori Prizmich

By Zack Snow | From Page: RER16

Raul Zamora

By Zack Snow | From Page: RER17

Joe Kaplan

By Zack Snow | From Page: RER17

Coldwell Banker

By Zack Snow | From Page: RER18

Open House Map

By Zack Snow | From Page: RER19

F1rst Street Real Estate

By Zack Snow | From Page: RER20