Bluefield Daily Telegraph, Bluefield, WV

National and World

December 21, 2012

Stocks sink after Republicans cancel budget vote

NEW YORK (AP) — Stocks fell on Wall Street Friday after House Republicans called off a vote on tax rates and left federal budget talks in disarray 10 days before sweeping tax increases and government spending cuts take effect.

The Dow Jones industrial average was down 106 points at 13,206 after the first hour of trading.

The Standard & Poor's 500 index was down 12 points at 1,431. The Nasdaq composite index fell 32 to 3,018. All three indexes are still positive for the week.

The House bill would have raised taxes on Americans making at least $1 million per year and locked in decade-old tax cuts for Americans making less. Taxes will rise for almost all Americans on Jan. 1 unless Congress acts.

House Speaker John Boehner had presented what he called "Plan B" while he negotiated with the White House on avoiding the sweeping tax increases and spending cuts, a combination known as the "fiscal cliff."

But Boehner scrapped a vote on the bill Thursday night after it became clear that it did not have enough support in the Republican-led House to secure passage. He called on the White House and the Democratic-led Senate to work something out.

The market opened sharply lower, then recovered some ground in mid-morning trading after Boehner told reporters that he was still open to talks with President Obama to get a deal done. The Dow had been down as much as 154 shortly after the opening bell. Before the market opened, stock index futures suggested that the Dow could lose as much as 200 points when trading opened.

"It's all 'fiscal cliff' related," Sal Arnuk, a partner at Themis Trading. Arnuk said the initial sharp drop in the market might have been an overreaction. "It's not a surprise that they weren't able to come to an agreement. I don't think most of Wall Street anticipated that they would come to an agreement."

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