Why the Dow Took a Beating Today

Fear dominated the markets, and continued worries about the fiscal cliff sent all major indexes tumbling Wednesday. The Dow Jones Industrial Average (INDEX: ^DJI  ) fell 185 points, or 1.45%, to close at 12,570. Recent widespread sell-offs have quickly erased much of this year's gains, and the Dow is now only 3% higher than it was to begin the year. 

The markets have been uneasy ever since President Obama was re-elected last Tuesday, as he must now work with a Republican Congress to resolve the so-called "fiscal cliff." If no agreement is reached, $607 billion worth of tax increases and spending cuts will abruptly come into effect at the beginning of 2013, threatening to stall the recovering economy. 

Bank of America (NYSE: BAC  ) , one of the most volatile stocks in the Dow, didn't take well to the market anxiety and got pummeled today, falling more than 3.6% and losing more than any other stock in the index. General Electric (NYSE: GE  ) joined Bank of America in the widespread selloff, shedding 3.2% of its value by day's end. Legendary investor Warren Buffett's holding company, Berkshire Hathaway (NYSE: BRK-A  ) , has reportedly divested itself of nearly 90% of its stake in GE in just three months. 

Facebook (Nasdaq: FB  ) , against the expectations of many, surged up more than 12% on a day when insiders and early employees were allowed to sell over 800 million shares, essentially doubling the float of the stock. Buyers may have been waiting for today to pounce on potentially devalued shares, sending the stock up and causing those with short positions to cover. 

Cisco Systems (Nasdaq: CSCO  ) was the only Dow component to gain any traction today, and it blew the market away, gaining more than 4.8% on a stellar earnings report. Cost-cutting measures allowed the company to lower prices and drive sales, surpassing analyst estimates in both revenues and earnings along the way.

Once a highflying tech darling, Cisco is now on the radar of value-oriented dividend lovers. Get the lowdown on the routing juggernaut in The Motley Fool's premium report. Our report also has you covered with a full year of free analyst updates to keep you informed as its story changes, so click here now to read more.


Read/Post Comments (1) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Add your comment.

DocumentId: 2113587, ~/Articles/ArticleHandler.aspx, 4/19/2014 5:51:56 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement