Updated from 6:39 p.m. ET to include additional information on Texas Instruments and NetApp.
The kneejerk reaction to President Barack Obama's re-election has seen plenty of follow-through with the Dow Jones Industrial Average now down in five of the past six sessions and the Nasdaq Composite qualifying for a correction by shedding 11% off its post-QE3 high for 2012.
All the rhetoric is pointing to a very difficult debate on solving the fiscal cliff. The president is sticking to his guns on higher taxes for the richest of Americans, pressing the advantage he gained a little more than a week ago. The Republicans have shown some willingness to reach across the aisle but they also have to defend what turf they have left and can't afford to cave completely.Deutsche Bank offered this assessment as anxiety about Capitol Hill builds on Wall Street. The firm noted that Obama is now looking for $1.6 trillion in additional tax revenue over the next decade, double the $800 billion target that he couldn't get GOP leaders on board with in the summer of 2011. One week on from the U.S. Presidential election result, and we're no closer to a solution on the fiscal cliff with 48 days left in the year," Deutsche Bank observed on Wednesday, adding later: "The seemingly hardline approach sets the scene for tough negotiations with congressional leaders on Friday." And the question can quickly go from "why buy stocks here?" to "why not sell before all of 2012's gains disappear?" Longtime market watcher Ed Yardeni was trying to stay bullish about the end of the year ahead of Wednesday's regular session but noted the time crunch of the fiscal cliff isn't exactly conducive to a surge in stocks. "The year is almost over," he wrote in emailed commentarty. "There won't be a year-end rally until the fiscal cliff issue is resolved. If it isn't resolved before the end of the year, then there is likely to be more downside to the current correction until the issue is resolved early next year. I'm still expecting a happy ending for the year, but there isn't much time left." Sam Stovall, chief U.S. equity strategist at S&P Capital IQ, noted some of the selling is being driven by investors looking to get ahead of changes in tax implications for investments. "With uncertainty surrounding the conclusion of the fiscal cliff, be it a likely postponement, a preferred outright solution, or the unthinkable continuation of irreconcilable differences, investors are tripping over themselves in an attempt to lighten their positions in stocks with hefty dividend yields or price appreciation, as future tax rates won't likely be as favorable," he wrote. "Even though this swift exodus may soon be followed by a 'V' shaped recovery should a resolution be forthcoming, a lot of technical damage has already been done. We think this will need to be repaired before a sustainable advance is resumed."