After two straight days of strong gains, the Dow Jones Industrial Average (INDEX: ^DJI ) fell 98 points or 0.7% today on (surprise!) afternoon breakdowns in the fiscal cliff negotiations.
While meaningful steps were taken earlier in the week toward a compromise that would save the country from automatic tax hikes and spending cuts, President Obama today threatened to veto a Republican back-up proposal called "Plan B," and the two sides exchanged some strong words. Obama said he had given Republicans a fair deal and accused them of having a personal grudge against him, saying, "It's very hard for them to say yes to me," and also said that the opposition party was too concerned about scoring political points against him. House Speaker John Boehner, meanwhile, said "The White House's opposition to a backup plan... is getting more bizarre and irrational."
In other macroeconomic news, housing starts and building permits were strong again in November, though housing starts came in below expectations.
General Motors (NYSE: GM ) shot up 6.6% today on news that the government would sell its stake in the car maker over the next 15 months. The nickname "Government Motors" has haunted GM shares since its 2009 bailout. According to the deal, GM will buy back 200 million shares from the government at a total of $5.5 billion, or $27.50 a share, and the Treasury will sell its remaining stake of 300 million shares, or 19% of the company, on the market over the next 15 months. Analysts say the government will end up losing billions of dollars on the bailout.
On the Dow today, GE (NYSE: GE ) was the biggest loser for the second day in a row, falling 3.1% as investors continued to run from the company's disappointing guidance issued on Monday. CEO Jeffrey Immelt had said business slowed due to the fiscal cliff. Its recent $4 billion acquisition of Italian aerospace company Avio did not seem to sway investors.
Aluminum maker Alcoa (NYSE: AA ) also dropped 3% on fiscal cliff concerns and word that Moody's may cut its credit rating to junk status, which would lift the company's borrowing costs and increasingly strain a manufacturer already struggling to turn a profit.
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