Experts See Stocks Continuing to Slump

Thursday, 08 Nov 2012 12:19 PM

By Dan Weil

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The Standard & Poor’s 500 plunged 2.4 percent on Wednesday, and many experts believe the losses will continue.

Investors are worried about the fiscal cliff, Europe’s debt crisis and sluggish global economic growth. President Barack Obama’s election victory Tuesday changed little in this regard.

"Economic prospects might not have been much different if Mitt Romney had won, especially as Congress remains divided,” Julian Jessop, chief global economist at Capital Economics, wrote in a commentary obtained by CNBC.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

“But the subsequent weakness in equities makes sense too. The focus has quickly moved on to the uncertainty over the fiscal cliff and perhaps back to the unsolved crisis in the eurozone as well."

Given the split Congress, Obama will have difficulty achieving a bipartisan budget accord, Jessop says.

On the technical side, stock market declines in the first day after an election have historically been followed by another 1.7 percent skid for the rest of the year, according to CNBC.

Former Democratic House Majority Leader Dick Gephardt sees intense partisan maneuvering over the budget in Congress.

“If it looks like that is happening, you could have a couple really bad days on Wall Street,” he said at a post-election conference, MarketWatch reports. “You could have the markets drop by 1,000 or 2,000 points.”

He was referring to the Dow Jones Industrial Average, of course, which closed at 12,933 Wednesday.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

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