* S&P 500 down 5.1 pct in last six sessions
* Cisco earnings beat expectations, shares jump
* Israeli offensive hits stocks, but lifts energy prices
* Dow down 1.5 pct, S&P 500 off 1.4 pct, Nasdaq off 1.3 pct
By Rodrigo Campos
NEW YORK, Nov 14 U.S. stocks slid on Wednesday
with declines accelerating after President Barack Obama set up a
drawn-out fight over the fiscal cliff when he stuck to his
pledge to raise taxes on the wealthy, and as violence increased
in the Middle East.
Obama, in his first press conference since re-election, held
to his position that marginal tax rates will have to rise to
tackle the nation's deficits.
With talks over solving the U.S. "fiscal cliff" in early
stages, investors are reacting to the uncertainty by shedding
"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
Without a deal, a series of mandated tax hikes and spending
cuts will start to take effect early next year that could push
the U.S. economy into a recession.
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. Egypt said it recalled its ambassador
from Israel in response.
"We know Europe's in trouble, China's slowing down ... and
now you've got the Middle East flaring up again. It's all
hitting at once, and obviously, the market is taking a 'sell
first, ask questions later' approach," said Ryan Detrick, senior
technical strategist at Schaeffer's Investment Research in
Industrial shares led the decline, dragged lower in part by
a 1 percent spike in crude prices after the Israeli offensive on
Gaza. The S&P industrial sector index fell 2.5 percent.
Wall Street had opened higher after Dow component Cisco
Systems Inc reported first-quarter earnings and revenue
late Tuesday that beat expectations, driving its stock up 4.8
percent to $17.66. But the positive momentum was short-lived.
The Dow Jones industrial average fell 185.23 points,
or 1.45 percent, to 12,570.95 at the close. The S&P 500
dropped 19.04 points, or 1.39 percent, to 1,355.49. The Nasdaq
Composite lost 37.08 points, or 1.29 percent, to
Both the Dow industrials and the Nasdaq ended at their
lowest levels since late June.
The S&P 500 has fallen 5.1 percent in the six sessions since
election night. Wednesday marked the benchmark index's lowest
close since July 25.
The Russell 2000 tumbled 2 percent. The Dow Jones
Transportation average slid 2.6 percent. FedEx Corp
shares dropped 3.7 percent to $87.12. Bank of America
shares lost 3.6 percent to $8.99.
In contrast, Facebook shares jumped 12.6 percent to
$22.36 as investors were relieved that expiring trading
restrictions on a huge block of shares did not trigger an
immediate wave of insider selling.
Teen clothing retailer Abercrombie & Fitch Co jumped
34.4 percent to $41.92 after the company reported unexpectedly
improved third-quarter results and a full-year outlook that
exceeded Wall Street's forecasts.
About 7.53 billion shares changed hands on the New York
Stock Exchange, the Nasdaq and NYSE MKT, more than the daily
average so far this year of about 6.51 billion shares.
On the NYSE, decliners outnumbered advancers by a ratio of
almost 9 to 1. On the Nasdaq, about four stocks fell for every
one that rose.