U.S. markets are responding to Tuesday’s elections with vigor. The Dow Jones Industrial Average lost 313 points in midday trade Wednesday, dropping to 12,933, as analysts say the blue-chip average could hit its largest decline in a day since last November. Today’s Dow numbers mean it’s the lowest it has been since August. The Standard & Poor’s 500-stock index also dropped in Wednesday morning trades to 1,395, with over 95 percent of those stocks showing a decline. The Nasdaq also fell 72 points down to 2,940.
Bank stocks noticeably dropped amidst worries about increased regulation on the industry. Energy stocks also declined, as crude-oil futures and coal shipments fell. Stocks in the hospital sector, which is expected to benefit from President Obama’s win, saw substantial increases in midday trade.
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Meanwhile the U.S. dollar dropped slightly, early Wednesday morning, but then recovered and showed gains just a few hours after the markets opened. By midday, the dollar had hit a two-month high against some of the world’s major currencies, as investors decided to play it safe with their currency investments. The dollar index shows a .3 percent increase to 80.803, while the euro dropped to $1.2734, according to Reuters data. According to analysts, that two-month low for the euro comes after global economists predicted a grim economy in the euro zone, and continuing problems related to sovereign debt in Spain and Greece.
Usually bad news anywhere causes the dollar to soar. After winning the election, President Obama now has to turn his attention to the so-called “fiscal cliff,” which is a bundle of spending cuts and tax increases that is set to take effect Jan. 1, unless Congress makes a deal.
One of the provisions in the fiscal cliff is a possible dividend tax policy change, which would result in taxes charged on dividends possibly tripling by the end of the year for tax brackets with the highest income. That change is putting pressure on stocks in all markets, especially telecoms stocks.