Fear is back in the market, and once again the "fiscal cliff" has brought it on, as you might expect. Investors have little else to think about these days, and rumors that President Obama is starting with $1.6 trillion in tax hikes aren't making anyone happy. But that's not all that's driving markets. Israel responded to Palestinian rocket strikes with its own air strikes today, and oil has jumped 1.1% as a result on fear that a larger conflict may erupt in the region. This hasn't helped the Dow Jones Industrial Average (DJINDICES:^DJI), which is down 1.2%, or the S&P 500 (SNPINDEX:^GSPC), which has fallen 1.1%.

Boeing (NYSE:BA) is down 2.7% on fear that we may actually go off the fiscal cliff. If we do, the Department of Defense will be a big loser, and spending on aircraft may suffer as a result.

Bank of America (NYSE:BAC) has fallen 2.7% on worry over the U.S. economy, as well as fear that megabanks may force the company to break into smaller pieces. The Wall Street Journal reported that an asset management firm asked competitor Citigroup (NYSE:C) to look into breaking up the bank, which would end decades of expansion by one of the U.S.'s biggest banks. However, this may not be a bad thing for bank investors, because smaller units would be able to focus on unlocking value that is lost in larger institutions -- especially at Bank of America.

On the brighter side, there was one big positive move on the Dow, and it may be more important than the fear driving stocks south. Earnings news, which should drive stocks in the long term, came from Cisco (NASDAQ:CSCO): The company reported revenue and earnings that beat estimates. The stock is up 4.9% as a result. This is another one of the beaten-down tech stocks that only have to perform mildly well to shock investors at this point.

Stocks will likely continue to ebb and flow in coming weeks, but they're spring-loaded if Washington actually gets a deal done. The optimist in me thinks we're in for a bull run once the silliness is over. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.