* S&P 500 down almost 5 pct in last 6 sessions
* Cisco earnings beat expectations, shares jump
* Dow down 1.2 pct, S&P 500 off 1.1 pct, Nasdaq off 1 pct
By Rodrigo Campos
NEW YORK, Nov 14 U.S. stocks fell 1 percent on
Wednesday as investors worried over U.S. budget negotiations and
a flare-up of violence in the Middle East.
Investors are grappling with the impact of the U.S. "fiscal
cliff," a series of mandated tax hikes and spending cuts that
start to take effect early next year.
U.S. President Barack Obama pushed for his proposal to have
the wealthy pay more in taxes as a way to tame the federal
deficit, taking a hard line in his opening bid before he begins
talks with U.S. lawmakers later in the week.
"I think we will have a last-minute cliffhanger solution,"
said Michael Cheah, portfolio manager at SunAmerica Asset
Management in Jersey City, New Jersey, about a deal to avoid the
"In the meantime, the market is going to get punched every
Taxes on capital gains and dividends could rise as part of
the negotiations, pushing investors to sell this year and pay
lower taxes on their gains.
Adding to the selling pressure, Israel launched a major
offensive against Palestinian militants in Gaza, killing the
military commander of Hamas in an air strike and threatening an
invasion of the enclave.
"It's a combination of continued uncertainty around the
fiscal cliff and military action in the Middle East," said Jim
Russell, chief equity strategist for U.S. Bank Wealth Management
in Cincinnati, about the main catalysts for the market's
The Dow Jones industrial average fell 125.64 points,
or 0.98 percent, to 12,630.54. The S&P 500 Index dropped
11.83 points, or 0.86 percent, to 1,362.70. The Nasdaq Composite
Index dropped 22.43 points, or 0.78 percent, to
The S&P 500 closed below its 200-day moving average for a
fourth day in a row on Tuesday, a technical indicator that
suggests recent declines could gain momentum.
Wall Street had opened higher after Dow component Cisco
Systems Inc reported first-quarter earnings and revenue
late Tuesday that beat expectations, driving its shares up 4.8
percent to $17.66. But the positive momentum was short-lived.
European equities fell and the benchmark FTSEurofirst-300
lost 1 percent as Greece's unresolved crisis raised
questions about the region's potential for economic growth,
while anti-austerity strikes across southern Europe added to
concerns that fiscal reforms would be politically difficult to