Political ugliness took the market hostage on Wednesday, as stocks sold off on a hostile and public back-and-forth between President Obama and House Speaker John Boehner. The president vowed to veto a plan offered by Congressional Republicans to raise the tax rate on earners above $1 million, insisting the proposal didn't go far enough. The exchange is the latest bleak indicator on what will become of the fiscal cliff, and the growing pessimism sent the Dow Jones Industrial Average (^DJI +1.79%) down 99 points, or 0.74%, to close at 13,251.
Just three of 30 Dow components finished positive on the day, and Intel (INTC 0.07%) was one of them, gaining about 0.7%. Though there hasn't been a major catalyst behind the move upwards, the stock is up nearly 3% in the past three days; investors may be attracted by Intel's 4.3% dividend and sub-10 P/E ratio. General Electric (GE +1.96%), on the other hand, lost 3.1% to lead the Dow lower. As a massive conglomerate that's reliant on the global economy for success, the threat of a fiscal cliff sending the U.S. spiraling into another recession looms especially large.
The after-hours markets also saw excessive volatility. Shares of the small-cap biopharma Amicus Therapeutics (FOLD +0.07%) fell by as much as 50%. The company's treatment for Fabry disease -- which can cause kidney failure and increased risk of heart attack or stroke -- failed to achieve "statistical significance" in a phase 3 study, the company announced today. In other words, the drug did not sufficiently outperform a placebo well enough in trials, which does not bode well for the drug, Amigal, coming to market.
One notable market outperformer on the day was Smith & Wesson (SWHC +0.07%), which rose more than 7% despite a downgrade from the investment firm Cohen & Co. citing the potential for tighter firearm regulation after the tragedy in Connecticut. The stock is down more than 14% in the past five days of trading, as activists and politicians focus with renewed vigor on gun control.
